COMMISSION STAFF WORKING DOCUMENT accompanying the Communication on Regional Integration FOR DEVELOPMENT in ACP Countries {COM(2008) 604} {SEC(2008) 2538}
Date: 2008-10-06
Institutions: European Commission
Subjects: ACP countries, developing countries, development aid, economic integration, least-developed country, management information system, sustainable development

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 6.10.2008 
SEC(2008) 2539/2 

CORRIGENDUM 
Annule et remplace le document SEC(2008)2539 du 1.10.2008  
Référence ajoutée dans la footnote 16  

COMMISSION STAFF WORKING DOCUMENT 

accompanying the 

COMMUNICATION ON REGIONAL INTEGRATION FOR DEVELOPMENT IN 
ACP COUNTRIES 

{COM(2008) 604} 
{SEC(2008) 2538} 

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TABLE OF CONTENTS 

List of Acronyms........................................................................................................................ 4 

1. 

The relevance of regional integration in a globalised world........................................ 7 

1.1. 

The global context........................................................................................................ 7 

1.1.1.  The global economic context ....................................................................................... 7 

1.1.2. 

Increasing attention to regional integration.................................................................. 8 

1.2. 

The increasing commitment of ACP countries to regional integration...................... 10 

2. 

The challenges facing regional integration in ACP countries.................................... 12 

2.1. 

The economic structure .............................................................................................. 12 

2.1.1.  Dual economies, weak export base and insufficient complementarity ...................... 12 

2.1.2.  Vulnerability to economic and financial shocks ........................................................ 14 

2.2. 

2.3. 

The need for (more effective) regional policies beyond trade ................................... 14 

Inefficient and/or incomplete infrastructure networks............................................... 16 

2.4.  Weak regional governance......................................................................................... 17 

3. 

3.1. 

3.2. 

Why does the EU care? .............................................................................................. 18 

EU-ACP relations and regional integration: an ancient partnership.......................... 18 

More and better can be done ...................................................................................... 21 

3.2.1.  The need for a consolidated EU vision ...................................................................... 21 

3.2.2.  Setting out the objectives ........................................................................................... 22 

4. 

4.1. 

4.2. 

Three possible approaches for EU support ................................................................ 24 

Elimination of barriers to trade .................................................................................. 24 

Policy co-ordination and co-operation for sustainable development......................... 26 

4.2.1.  Reducing physical barriers through infrastructure networks ..................................... 27 

4.2.2.  Strengthening interdependence by action at macro-economic and micro-economic 

level ............................................................................................................................ 28 

4.2.3.  Management of common resources or challenges ..................................................... 30 

4.3. 

Developing political co-operation for effective regional integration......................... 31 

4.3.1.  Regional cooperation for peace and stability:............................................................ 31 

4.3.2.  Good governance as a regional good ......................................................................... 32 

4.3.3.  Harnessing the effects of migration ........................................................................... 32 

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4.4. 

Comparing the approaches......................................................................................... 32 

4.4.1.  Overview of advantages and drawbacks .................................................................... 32 

4.4.2.  The contribution of different approaches to EU policy objectives ............................ 40 

4.4.3.  Finding the right mix.................................................................................................. 41 

5. 

5.1. 

5.2. 

5.3. 

5.4. 

5.5. 

EDF support to regional integration: a mix of approaches ........................................ 42 

The 9th EDF regional programmes............................................................................. 42 

The 10th EDF regional programmes........................................................................... 44 

Exploiting the synergies for inter-regional cooperation............................................. 45 

Design of regional integration and EU support.......................................................... 46 

Risk factors ................................................................................................................ 47 

Annex 1: Overview of regional integration in ACP regions.................................................... 50 

Annex 2: Review of existing literature on regional integration in ACP .................................. 64 

Annex 3: Stocktaking of EPAs and regional integration ......................................................... 67 

Annex 4: EC financial support for regional integration........................................................... 70 

Annex 5: Overview of 9th EDF regional programmes (2002-2007) ....................................... 71 

Annex 6: Evaluation of EDF Programmes............................................................................... 74 

Annex 7: References ................................................................................................................ 77 

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LIST OF ACRONYMS 

ACP 

APF 

APRM 

ASEAN 

AU 

African, Caribbean and Pacific countries 

African Peace Facility 

African Peer Review Mechanism  

Association of South East Asian Nations 

African Union 

CACM 

Central American Common Market 

CARICOM 

Caribbean Community and Common Market 

CEMAC 

Communauté Économique et Monétaire de l'Afrique Centrale 

CEPGL 

Economic Community of the Great Lakes Countries 

CET 

Common External Tariff 

CFA Franc 

Communauté  financière  d'Afrique  /  Coopération  financière  en  Afrique 
centrale Franc (currency) 

COMESA 

Common Market for Eastern and Southern Africa 

CSME 

Caribbean Single Market Economy 

CSP 

DRC 

EAC 

EC 

Country Strategy Paper 

Democratic Republic of Congo 

East African Community 

European Community/ies 

ECCAS 

Economic Community of Central African States 

ECOWAS 

Economic Community of West African States 

EDF 

EIB 

EPA 

ERDF 

FDI 

FTA 

European Development Fund 

European Investment Bank 

Economic Partnership Agreement 

European Regional Development Fund 

Foreign direct investment 

Free Trade Area 

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IfS 

IGAD 

IOC 

IRCC 

MDG 

Instrument for Stability  

Intergovernmental Authority on Development 

Indian Ocean Commission 

Inter-Regional Coordinating Committee 

Millennium Development Goal 

MERCOSUR 

Mercado Común del Sur 

MNC 

NAFTA 

NEPAD 

NIP 

OCT 

OECS 

PICTA 

PIF 

REC 

RIP 

RISP 

RSP 

SACU 

SADC 

SME 

SOPAC 

SPBEA 

SPC 

SPREP 

SPS 

SPTO 

Multi-National Corporation 

North American Free Trade Association 

New Partnership for Africa's Development 

National Indicative Programme 

Overseas Countries and Territories 

Organisation of East Caribbean States 

Pacific Islands Countries Trade Agreement 

Pacific Islands Forum 

Regional Economic Community 

Regional Indicative Programme 

Regional Indicative Strategic Development Paper 

Regional Strategy Paper 

Southern African Customs Union 

Southern African Development Community 

Small and Medium Enterprises 

South Pacific Applied Geosciences Commission 

South Pacific Board of Educational Assessment 

Secretariat for the Pacific Countries 

South Pacific Regional Environmental Programme 

Sanitary and Phytosanitary standards 

South Pacific Tourism Organisation 

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TBT 

Tariff barriers to trade 

UDEAC 

Union Douanière et Économique de l’Afrique Centrale 

UEMOA 

Union économique et monétaire ouest-africaine 

UNCTAD 

United Nations Conference on Trade and Development 

USP 

University of the South Pacific 

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1. 

THE RELEVANCE OF REGIONAL INTEGRATION IN A GLOBALISED WORLD 

1.1. 

The global context 

1.1.1.  The global economic context 

Over  the  last  decade,  the  globalisation  process  has  gained  further  momentum,  changing  the 
global  economic  landscape  and  bringing  the  emergence  of  new  economic  powers  such  as 
China  and  India.  Global  trade  and  investment  flows  have  grown  much  more  rapidly  than 
national economies, bringing about an unprecedented level of economic interdependence.  

In  an 
increasingly  complex  web  of  economic  and  political  relations,  economic 
interdependence has grown much more rapidly and deeper than the political cobweb. Not all 
actors – governmental or commercial – have been able to adapt and take advantage of the new 
course. In this respect, larger and stronger players have a significant advantage as they have 
retained (or gained) the ability not only to adapt to, but to actually shape, globalisation.  

This explains why globalisation has tended to marginalise the smaller and weaker states and 
companies,  thereby  increasing  inequalities  –  both  within  countries  and  between  countries  – 
between winners and losers. In this context, most ACP countries have not been in a position 
to  harness  globalisation  to  achieve  their  development  objectives  and,  in  particular,  to 
accelerate  poverty  reduction.  As  shown  in  table  1  below,  their  share  of  world  trade  and 
investment has stagnated while developing countries at large have been reaping the benefits 
of globalisation.  

Table  1:  The  position  of  developing  countries  and  ACP  countries  in  world  trade  and 
investment 

Indicator 

1990 

2006 

Developing countries' share of world trade  
Sub Saharan African countries' share of world trade 

South-south share of world trade  
Sub Saharan African intra-regional trade as a share of world trade 

Developing countries' share of FDI flows 
Sub Saharan African countries' share of FDI flows 

Developing countries' share of FDI stock 
Sub Saharan African countries' share of FDI stock 

Source: UNCTAD 

23.2% 
2.9% 

7.6% 
0.1% 

17.8% 
0.8% 

20.5% 
2.0% 

34.7% 
2.7 % 

17.0% 
0.2% 

29.1% 
0.9% 

26.3% 
1.7% 

This trend is not inevitable, as exemplified by the recent surge of growth rates in Africa. This 
accelerated growth is, however, based to a large extent on a commodity boom that needs to be 
translated into long-term development. In any case, at the current pace, ACP countries would 
need much time to catch up with the most developed economies. It is also widely recognised 
that  additional  growth  is  needed  if  developing  countries  are  to  meet  the  2015  targets  of  the 
Millennium  Development  Goals  (MDGs).  Table  2  below  shows  clearly  that  sub-Saharan 
Africa  is  currently  not  on  track  to  achieve  any  of  these  goals.  Accelerated  growth  is,  in 
particular,  a  necessary  –  if  not  sufficient  –  condition  for  the  central  objective  of  poverty 
reduction is to be achieved.  

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Table 2: The Millennium Development Goals and selected indicators for Sub-Saharan Africa. 

 Goal  
Sub-goal / indicator 

1. Eradicate extreme poverty and hunger 
Halve the number of people living on less than $1 per day 
(1990 – 2015) 
Halve the proportion of people who suffer from hunger (1990 – 
2015) Measured by the number of under 5s under age. 

2. Achieve universal primary education 
Ensure all boys and girls complete a full primary school course 
(measured by enrolment rate) 

3. Promote gender equality and empower women 
Measured by the share of women in single or lower houses of 
parliament 

Progress 

1990 

2004 

46.8% 

33% 

41.1% 

29% 

54% 

70% 

7.2% 

16.5% 

4. Reduce child mortality 
Reduce by two thirds the mortality rate under 5 

5. Improve maternal health 
Reduce by ¾ the maternal mortality rate 

185 per 1000 

166 per 1000 

940 per 100 000 

920 per 100 000 
(2005) 

6. Combat AIDS, Malaria and other diseases 
Halt and reverse the spread of aids (measured by prevalence of 
AIDS in 15-49 year olds) 

7.Ensure environmental stability 
Reduce by half the proportion of people without access to basic 
sanitation 

2% 

68% 

6% 

63% 

Source: United Nations 

1.1.2. 

Increasing attention to regional integration 

The recent proliferation in the number of regional integration projects and the focus on their 
importance  can  be  attributed  to  the  fact  that  regional  integration  provides  a  response  to  the 
challenges of globalisation. Smaller states find themselves in a weak position to attract global 
companies  and  to  exert  political  influence  an  international  level.  Regional  integration 
provides  smaller  states  with  recognition  and  weight  and  increases  their  ability  to  better 
harness the benefits and negative impacts of globalisation.  

The  EU  itself  is  a  prime  example  of  this  kind  of  response,  where  the  internal  market  and 
common  policies  allow  companies  based  in  Europe  to  build  up  a  strong  regional  economic 
base, while enabling Member States to pool their sovereignty to address common challenges 
in a cooperative manner.  

While  the  concept  of  regional  integration  among  developing  countries  has  existed  since  the 
formation  of  SACU  (Southern  Africa  Customs  Union)  in  1910,  its  rise  in  popularity  began 
during  the  1960s  with  the  formation  of  organisations  such  as  CACM  (Central  American 
Common  Market)  and  ASEAN  (Association  of  South  East  Asian  Nations).  More  recently, 
regional  integration  has  become  one  of  the  dominant  features  of  international  politics.  The 
1990s  saw  the  emergence  of  new  organisations  such  as  MERCOSUR  (Mercado  Común  del 
Sur  –  Southern  Common  Market)  and  the  unique  NAFTA  (North  American  Free  Trade 

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Association),  which  joins  developed  countries  (Canada  and  US)  with  a  newly  industrialised 
country  (Mexico).  Since  the  beginning  of  the  21st  century,  regional  organisations  have  both 
expanded in membership and broadened co-operation areas.  

ACP states did not stay out of this trend towards increased regionalisation. Across the ACP 
region,  there  are  now  some  20  regional  integration  arrangements  and  dozens  of  specialised 
regional cooperation organisations. Many of the ACP arrangements are focussing in the first 
place on achieving objectives relating to economic and trade aspects or cooperation 

This  attraction  for  regional  integration  can  be  easily  understood  and  explained  by  the 
outcomes it is expected to bring in at least three areas (see also annex 2 for a review of the 
literature on the benefits of regional integration):  

–  Through  cooperation  and  institutionalisation  of  conflict  prevention  and  the  peaceful 
conflict  resolution,  regional  cooperation  helps  stabilisation.  Regional  organisations  play 
an increasingly important role in conflict management, peace-keeping and peace-building. 
They can play an important role in helping to tackle the root causes of conflicts as well as 
promoting  and  protecting  human  rights,  building 
thereby  enhancing 
understanding  among  societies  and  cultures  leading  to  reconciliation  in  post-conflicts 
situations.  By  deepening  interdependence,  regional  integration  provides  disincentives  for 
countries or groups to act aggressively against neighbouring countries and populations. 

trust  and 

–  By  building  up  larger  markets,  creating  harmonised  and  effective  frameworks  for 
economic operators,  fostering  the  exchange of goods and resources, regional integration 
can  foster  economic  development  through  economies  of  scale  and  stimulation  of 
investment. From an EU perspective, regional integration is a step towards integration into 
the  global  trading  system  by  allowing  efficiency  gains  through  enlarged  markets  and  an 
open  regional  integration.  It  is,  in  particular,  a  means  to  foster  south-south  trade  in  a 
context where many developing countries trade more with developed countries than with 
their neighbours. By being essential for economic growth, regional integration is therefore 
a vehicle for accelerated poverty reduction. 

Box 1: Regional integration and growth 

Literature1 on regional integration and growth generally does not find a direct link between 
the two, but rather an indirect association, or so called "dynamic growth effects". Te Velde 
(2008)  completed  a  study  of  regional  integration  and  growth  in  ACP  regions,  and  found 
positive  effects  on  growth  through  regional  integration  in  trade  and  investment.  In 
particular, "regional integration is likely to increase aggregate growth through the growth 
effects  of  increased  trade  and  investment,  and  one  supporting  piece  of  evidence  is  that 
exporting  firms  have  higher  productivity".  Schiff  and  Wang  (2003)  similarly  found  that 
NAFTA imports raised Mexican productivity by between 6.5 and 7.5%.  

–  Regional cooperation is also the best way to provide or protect "regional public goods" 
because  it  is  more  effective  in  addressing  challenges  with  a  trans-national  dimension. 
Expected  effects  of  regional  cooperation  are  i)  the  provision  of  "regional  governance 
public  goods"  such  as  international  economic  governance  and  regional  institutional 
development;  ii)  the  provision  of  "regional  knowledge  public  goods"  such  as  experience 
learning and information sharing; iii) overcoming "other market and coordination failures 

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all 

For 
in 
http://ec.europa.eu/development/icenter/repository/Regional-Integration-Report-18-09-2008_en.pdf  

see  Annex 

document, 

references 

literature 

this 

to 

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and  coordinating  activities  with  strong  regional  externalities"  such  as  competitiveness 
challenges  (ODI  2008).  Typically,  transmissible  diseases  and  the  fight  against  migratory 
pests, protection and management of natural resources (e.g. water, land) or migration are 
cross-border  challenges  that  require  cross-border  cooperation  if  they  are  to  be  mitigated 
and if increased economic activity of a regional scale is to be sustainable. 

Box 2: Regional public goods 

Public  goods  should  be  provided  at  a  regional  rather  than  national  level  if  either  the 
underlying problem cannot be tackled at national level, or if regional level intervention is 
more efficient.2 Examples of potential regional public goods include: cross-border transport 
links,  peace-keeping  operations,  fighting  human  trafficking,  the  fight  against  specific 
crimes (notably fraud and smuggling), infectious disease control, agricultural pests control 
and specific climate agricultural research (this could include food security).  

A natural problem with regional public goods is their source of finance. Countries are less 
keen  to  take  loans  to  finance  regional public  goods with  larger spill-over  effects  to other 
countries  in  the  region,  and  multi-country  loans  are  hard  to  manage  in  practical  terms 
(Ferroni, 2001). 

1.2. 

The increasing commitment of ACP countries to regional integration 

The  vulnerability  of  most  ACP  economies,  their  fragmentation  and  the  resulting  lack  of 
resources  requires  action  going  beyond  national  borders.  This  is  felt  by  ACP  countries 
themselves as all belong to at least one form of regional cooperation or organisation. They see 
this  as  a  remedy  to  their  inadequate  economic  size  with  regard  to  the  globalizing  economy 
and an opportunity to adopt a more strategic approach to their development and speed up their 
socio-economic  transformation.  It  is  also  a  powerful  means  to  stabilize  their  geo-political 
environment  through  fostering  peace,  reconciliation  and  stability  in  their  immediate 
environment.  

The  importance  of  regional  political  integration  was  exemplified  in  Africa  by  the 
establishment  in  2002  of  the  African  Union  (AU).  The  AU  includes  all  African  countries 
(except Morocco) with the ultimate aim of forming a "United States of Africa". Currently, it is 
involved  in  a  variety  of  chiefly  political  activities,  such  as  conflict  prevention  and  peace 
keeping  (e.g.  Darfur),  but  economic  and  monetary  union  is  also  part  of  its  agenda  and  the 
African Regional Economic Communities (RECs) are regarded as stepping stones to this goal.  

In  other  regions  as  well,  regional  integration  is  seen  as  key.  The  Pacific  region  contains  a 
number  of  organisations  with  specific  fields  of  co-operation  (e.g.  SPBEA  and  USP  for 
education). In the Caribbean, 12 of the 15 CARICOM members have progressed to a single 
market.  

There  have  been  long-standing  efforts  to  harness  regional  integration  for  economic 
development. These efforts have been further stepped up in recent years, with many free-trade 
areas  and  customs  unions  under  creation  and  a  number  of  regions  designing  plans  for 
ambitious common policies (see Table 3 below and Annex 1).  

2 

For  a  more  complete  definition  of  regional  public  goods,  see  Ferroni  (2001),  P3  ff.  and  the  original 
definition of international public goods by Kanbur (2001).  

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Table 3: Regional Economic Communities in the ACP: State of play of economic integration 

REC 

Integration reached 3 

Integration planned4 

Caribbean 

OECS 

Single Market (through CARICOM) 

Economic Union (2009 

CARICOM 

Single Market (2006) 

Single Market and Economy (2008) 

Central Africa 

CEMAC 

Single currency (CFA Franc pegged to 
the  Euro),  FTA  (1998)  and  Customs 
Union (1994)  

Full FTA, Customs Union and Common 
Market (no fixed date) 

ECCAS 

FTA  launched  in  2004  and  slowly 
implemented 

Customs  Union  (2011),  Common  Market 
(no fixed date) 

Eastern Africa 

EAC 

Customs Union (2005) 

Common Market (2012) 

COMESA 

FTA (2000) 

Customs Union (2008) 

Southern Africa 

SADC 

FTA (2008) 

Customs Union (2010) 

West Africa 

UEMOA 

Single currency (CFA Franc pegged to 
the Euro), Customs Union (2000) 

Common Market (no fixed date) 

ECOWAS 

Partial FTA and Customs Union 

Full customs union 2007 (delayed) 
Monetary Union (2009) 

Pacific 

PICTA 

FTA (2003) 

No further step planned 

Beyond trade and economic integration, many initiatives aim at pooling efforts and resources 
of ACP states to tackle common problems. 

In  the  Pacific,  the  Forum  Fisheries  Agency  has  developed  an  integrated  approach  in  the 
management  of  fish,  a  vital  economic  resource  for  many  countries.  The  Forum  Fisheries 
Agency has provided state-of-the-art legal and economic advice for the conclusion of fishery 
agreements, surveillance of fishery activities in members' exclusive economic zones and for 
the  development  of  a  domestic  tuna  industry.  Higher  education  has  also  traditionally  been 

3 
4 

Regional economic arrangements are often applied with distortions. 
REC  integration  plans  are  often  changing.  The  proposed  integration  listed  here  is  based  on  the  most 
recent, readily available public information. 

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provided at the regional level in the Pacific as it was recognised as the most effective way for 
small  countries  to  deliver  university  education  to  high  standards,  as  demonstrated  by  the 
University  of  South  Pacific  (USP),  the  Fiji  School  of  Medicine,  or  the  University  of  Papua 
New  Guinea  (UPNG)  –  all  with  highly-evolved  distance  education  facilities  in  the  non-
campus islands.  

In  Eastern  and  Southern  Africa,  the  Nile  Basin  Initiative  (NBI)  was  officially  launched  in 
1998  by  the  ten  riparian  states.  In  a  region  that  is  characterised  by  severe  poverty  and 
instability and where the allocation and use of Nile waters have long been a source of serious 
tension, the participating states agreed on a shared vision to achieve sustained socio-economic 
development  through  the  equitable  utilisation  of,  and  benefit  from,  the  common  Nile  basin 
water  resources.  To  convert  this  vision  into  action,  multi-purpose  infrastructure  (for  water 
supplies,  hydro-electric  power,  irrigation  systems)  is  being  developed  jointly  to  reduce 
vulnerability to droughts, to manage floods better, to ensure more water, more food and more 
electricity in a sustainable manner.  

In  the  same  region,  the  COMESA  Free  Trade  Agreement  (FTA)  has  proved  beneficial  to 
intra-COMESA trade, with trade growing at an annual average of 9% within COMESA and 
by  16%  among  FTA  Member  States  between  2000  and  2007  –  much  more  quickly  than 
overall  trade.  A  World  Bank  study  concluded  that  the  FTA  has  had  a  positive  impact  on 
growth  in  the  members  that  joined  the  FTA,  on  cross-border  investment  flows  and  on  the 
development of intra-industry linkages, with trade on semi-manufactured goods between FTA 
members overtaking trade of similar products with the rest of the world. 

In  the  Caribbean,  although  tropical  storms  and  hurricanes  are  frequent  and  have  a  large 
adverse  impact  on  the  fragile  economies  of  the  region,  the  present  regional  capacity  to 
determine  how  severe  a  particular  weather  condition  will  be,  and  the  likely  effect  in  a 
localised area is very limited. CARICOM, the Caribbean Meteorological Organization and the 
national  disaster  agencies  decided  to  pool  resources  in  order  to  promote  a  reliable  warning 
system  and  to  obtain  the  advanced  technologies  that  will  provide  the  information  needed  to 
improve the preparedness of the authorities and the general public and thus help minimise loss 
of life and damage to property. 

2. 

THE CHALLENGES FACING REGIONAL INTEGRATION IN ACP COUNTRIES 

Despite  real  progress  and  clear  commitment  to  enhance  regional  integration,  a  number  of 
critical challenges remain if regional integration is to fulfil its development potential for 
ACP partners.  

2.1. 

The economic structure 

2.1.1.  Dual economies, weak export base and insufficient complementarity 

Most ACP countries (especially those with fragmented markets) suffer from dual economies; 
that  is  to  say  small  companies  operate  on  a  very  local  level,  while  larger,  predominantly 
foreign  multinational  corporations  (MNCs)  are  either  present  on  the  larger  markets  of  the 
country  (goods  not  produced  locally;  business  services)  or  operate  in  a  de  facto  off-shore 
mode (goods produced but not consumed locally – typically raw material). The result is a lack 
of medium-sized enterprises able to operate on a national, let alone regional, level.  

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Firstly,  this  is  an  issue  as  medium-sized  enterprises  are  essential  for  growth  and 
competitiveness.  Secondly,  the  dual  economy  causes  ACP  countries  to  have  a  weak  export 
base as demonstrated by the ratios of sectoral import and exports between the ACP and EU 
shown in Table 4 below. While the ACP region runs a trade surplus with the EU, it clearly 
exports  primary  goods  (78.8%  of  their  exports)  and  imports  manufactured  goods  (74%  of 
their imports).  

Table 4: EU / ACP trade by sector 2006 (excluding South Africa).  

Sector (Sub-sectors) 

ACP Exports to EU 

ACP Imports from EU 

Primary Products 

Agriculture 

Energy 

Manufactured Products 

Machinery 

Transport 

Chemicals 

78.8 

25.4 

43.5 

20.4 

0.8 

4.9 

1.5 

Source: European Commission  

23.9 

13.1 

9.1 

74 

28.9 

15.7 

10.8 

The  combined  effect  of  this  duality  and  weak  export  base  is  a  poor  complementarity  of 
national economies within a region, as economies find themselves producing and exporting a 
narrow range of similar products. As a result, trade integration is very limited in ACP regions 
and,  as  shown  in  Table  5  below,  trade  with  the  EU  is  generally  larger  than  with  regional 
neighbours.  CEMAC  countries,  for  instance,  conduct  1%  of  their  trade  between  themselves 
and  about  45%  with  the  EU.  In  a  number  of  cases,  however,  significant  trade  barriers  still 
persist and reduce the trade potential or trigger informal trade flows which do not appear in 
official statistics. Table 5: ACP regions import and export shares for 2004 

Exports 

Imports 

Region 

Within 
region 

ECOWAS 

9.3% 

CEMAC 

0.8% 

COMESA 

9.2% 

SADC 

2.1% 

Caribbean 

8.9% 

Pacific 

0.6% 

Source: CEPII  

Other ACP 

EU 

1.2% 

3.2% 

4.8% 

4.5% 

0.8% 

0.5% 

31.9% 

37.8% 

29.9% 

32.6% 

20.0% 

15.4% 

13 

EN 

Within 
region 

10.5% 

1.4% 

6.4% 

2.5% 

5.8% 

1.3% 

Other ACP 

EU 

1.3% 

8.2% 

2.7% 

4.3% 

1.4% 

0.8% 

37.0% 

53.5% 

22.4% 

23.3% 

18.1% 

8.8% 

   EN 

 
Where conditions for effective and credible integration are strengthened, trade stands a chance 
to  take  off.  This  is  the  case  in  EAC  where  Kenya's  traditional  exports  to  neighbouring 
countries exceed its traditionally dominant exports to Europe. 

The lack of diversification and complementarity is not only due to the aforementioned factors, 
but  also  to  the  continued  existence  of  many  regulatory,  administrative  and  physical  trade 
obstacles between countries in the same region and to the narrowness of the national markets 
(itself  an  effect  of  limited  purchasing  power).  As  a  consequence,  contrary  to  developed 
economies, the potential gains and prospects of regional integration in ACP countries lie more 
in longer-term prospects than in the rationalisation of existing production structures. 

2.1.2.  Vulnerability to economic and financial shocks 

ACP  countries  are  vulnerable  due  trade  shocks  due  to  their  reliance  on  a  small  group  of 
products, exported to a limited number of export markets (as mentioned above). Fluctuations 
in  commodity  prices  are  a  cause  of  instability  for  people's  income,  fiscal  revenues  and 
macroeconomic stability. One striking example occurred in Ethiopia between 1986 and 87. A 
fall in the world price of coffee caused a 40% decrease in Ethiopia's terms of trade, ultimately 
resulting in a 6% decline in Ethiopia's real income. Foreign capital inflows, most of which are 
short-term,  make  many  ACP  countries  vulnerable  to  financial  shocks5.  As  financial  shocks 
can also affect exchange rates, they can also prove disruptive for regional trade. 

2.2. 

The need for (more effective) regional policies beyond trade  

From  European  experience,  regional  integration  requires  more  than  elimination  of  trade 
barriers  to  be  effective  and  beneficial  for  all  (business,  consumers,  workers,  citizens). 
Regional  integration  should  serve  the  objective  of  sustainable  development  and  poverty 
reduction, and therefore be able to develop co-operation and address common challenges.  

These common challenges may include negative externalities, in particular the environmental 
and  social  impacts  of  increased  regional  economic  flows.  Such  challenges  can  often  be 
tackled at a regional level through the provision of appropriate regional public goods.  

Agriculture is one example area; it remains the economic base for the majority of the poor in 
Africa  and  accounts  for  about  a  third  of  Africa’s  GDP  plus  the  bulk  of  its  employment.  In 
view  of  this,  the  AU  and  NEPAD  have  launched  the  Comprehensive  Africa  Agriculture 
Development Programme (CAADP) to foster agricultural development. In its communication 
"Advancing  African  agriculture",  the  European  Commission,  while  recognising  that  the 
national level is where the most intense cooperation will continue to take place, expressed its 
view  that  in  many  areas  (such  as  research,  knowledge  dissemination,  trade  facilitation, 
harmonisation  of  norm  and  standards,  management  of  cross-border  resources),  action  at 
continental and regional levels can contribute to agricultural development.  

Regional  integration  can  also  make  an  important  contribution  to  food  security.  Most  ACP 
regions have put in place regional food security strategies to exploit the potential benefits of 
enhanced  integration,  notably  in  terms  of  trade  (lowering  the  cost  of  inputs),  infrastructure 
(sharing the costs of irrigation projects; improving road and lowering the cost of transport), 

5 

It is worth noting, however, that commodity-related FDI inflows into some countries have increased in 
recent years. 

EN 

14 

   EN 

 
                                                 
market  management  (stocks,  improved  market  information,  regional  exchanges)  and  control 
of animal and pest diseases.  

Migration is a further area which can be addressed with policies at regional level. Growing 
mobility  and  migration  leads  may  have  destabilizing  effects  in  countries  characterised  by 
weak  governance  and  lack  of  social  safety  nets;  for  example,  more  rapid  spread  of 
communicable  diseases  across  borders  or  xenophobic  reactions.  This  challenge  can  best  be 
met by regional cooperation and cross-border actions in support of national responses. 

Regional  economic  integration  between  poor  and  poorer  countries  may  also  lead  to  a 
concentration of wealth in the lead economic area (regional power house) to the detriment of 
the poorest regions (Venables, 2000). In particular, integration will lead to increased FDI at a 
regional level, but this new investment may be focussed specifically within richer areas of the 
regional powerhouses, thus challenging the objective of poverty reduction for the region as a 
whole.  This  theory  is  backed  up  by  empirical  work  on  US  and  UK  FDI  in  developing 
countries;  it  was  found  that  countries  with  a  larger  market,  or  those  countries  closer  to  the 
larger market, received more FDI (ODI, 2006). Policies that  aim to  cushion potential losers 
are  even  more  necessary  in  the  case  of  "open"  regional  integration,  where  increased 
competitive  pressure  comes  not  only  from  the  "powerhouse"  in  each  region,  but  also  from 
third parties. 

A  further  area  which  can  benefit  from  wider  regional  policies  is  that  of  industry 
competitiveness  and  the  business  climate.  Well-functioning  integrated  regional  markets 
benefiting  from  reduced  transaction  costs  will  increase  trade,  strengthen  competition, 
encourage innovation and provide new and better quality goods and services to more people. 
This is particularly important for fledgling SMEs that need incentives to trade across borders. 
By  contrast,  the  lack  of  business  support  services  (inefficiency  of  financial  markets, 
segmentation  of  services  markets,  etc)  and  of  industrial  strategies  with  a  clear  regional 
perspective  are  limitations  to  the  creation  of  new  businesses  and  the  diversification  of 
economic structures. 

However,  for  SMEs  to  fully  benefit,  it  is  necessary  to  ensure  that  the  relevant  financing 
systems,  which  provide  SMEs  with  access  to  borrowing,  are  in  place.  The  improvement  of 
regulatory  framework  and  business  climate  will  also  contribute  to  attract  foreign  direct 
investments (FDI) in a context of local financial systems that fail to channel local savings to 
local  investments.  FDI  is  particularly  valuable  as/when  it  brings  not  only  growth  but  also 
much-needed  productive  capacities 
technology,  externalities,  productivity). 
Furthermore, the need for increased R&D is being recognised by most leaders in developing 
countries  as  imperative  for  the  diversification  and  upgrading  of  their  economies.  However, 
many  of  the  results  of  R&D  investment  are  only  visible  in  the  medium-  to  long-term  while 
national budgets are hard-pressed to tackle other development urgencies. This makes the case 
for regional instruments in R&D particularly appealing.  

(skills, 

Regional  integration  should  also  ensure  macro-economic  convergence  and  stability.  ACP 
countries  differ  highly  with  respect  to  their  macroeconomic  indicators  and  policies. 
Strengthening  the  regional  coordination  of  macroeconomic  policies  and  structural  reforms 
will  help  build  stronger  regional  markets  and  macro-economic  stability,  including  low 
inflation,  less  volatile  exchange  rates,  sound  fiscal  policies  and  sustainable  levels  of  public 
debt.  Economic  governance  plays  also  an  important  role  e.g.  in  the  management  of  natural 
resources,  fight  against  corruption,  modernizing  and  reforming  public  finance.  Regional 

EN 

15 

   EN 

 
coordination  in  these  areas  contributes  to  securing  stability  and  the  smooth  economic 
adjustment needed for growth and poverty reduction.  

Box 3: The challenges of monetary integration 

There  are  four  monetary  unions  in  ACP,  covering  a)  four  of  the  five  countries  of  the 
Southern African Customs Union (SACU); b) the two economic and monetary unions in 
West and Central Africa that tied their common currency, the CFA franc, to the euro; and 
c)  the  OECS  in  the  Caribbean  that  tied  their  currency  towards  the  US  dollar  (and 
previously the British pound). SADC, ECOWAS, EAC, COMESA and CARICOM also 
aim  to  establish  monetary  unions.  All  regions  have  agreed  on  programmes  of 
macroeconomic  policy  coordination  and  convergence.  In  Africa,  the  overarching 
objective is to implement a monetary union and a single currency by 2021 as agreed by 
the  AU.  Regional  integration  agreements  are  regarded  as  stepping  stones  towards  a 
common currency for the continent.  

To  date  member  countries  have  mixed  results  of  macroeconomic  convergence  and 
therefore  failed  to  reach  their  ambitious  calendars  for  monetary  integration.  Incomplete 
trade integration, a weak business environment and underdeveloped financial sectors have 
remained  problems.  In  ECOWAS,  where  the  alignment  of  the  UEMOA  zone  with  the 
non-UEMOA  members  was  originally  envisaged  by  2005,  the  heterogeneous  economic 
structures of member states, notably of oil producer Nigeria as the biggest economy, and 
country-specific  political  and  economic  problems  seriously  constrained  their  ability  to 
pursue consistent macro-economic policies. Another problem is the non-convertibility of 
currencies (except the CFA Franc) which hinders cross-border financial settlements (ODI, 
2008). 

2.3. 

Inefficient and/or incomplete infrastructure networks 

The  benefits  of  trade  integration  are  hampered  by  weak  trade  facilitation  infrastructure  and 
systems, while natural handicaps (insular economies, landlocked countries) can be offset by 
regional cooperation.  

In  its  Communication  on  the  EU-Africa  Partnership  on  Infrastructure6,  the  European 
Commission  has  explained  the  need  to  secure  the  interconnectivity  of  the  African  continent 
and its different regions. Despite slow improvement, transport costs remain high, much higher 
than  in  other  developing  regions,  averaging  14%  of  the  value  of  all  exports  compared  with 
8.6%  for  all  developing  countries,  and  higher  still  for  many  landlocked  countries  –  Malawi 
(56%),  Chad  (52%)  and  Rwanda  (48%).  This  imposes  a  huge  burden  on  cross-border  trade 
and economic development at large.  

While the lack of energy remains a strong constraint on growth, there is a wide convergence 
that  energy  resources  can  be  optimally  exploited  from  a  regional  platform.  Energy  pooling 
and interconnectivity are addressing the problem of unreliable and costly services. Increased 
cross-border energy cooperation and trade is essential for improving reliability, affordability 
and access. The potential of regional integration and cooperation is particularly large when, as 
is  the  case  in  Africa,  energy  resources  are  substantial  but  require  massive  investment  to  be 
used.  

6 

Interconnecting Africa: the EU-Africa Partnership on Infrastructure, 13 July 2006, COM(2006)376 final 

EN 

16 

   EN 

 
 
 
 
                                                 
2.4.  Weak regional governance 

There  are  three  main  causes  of  weak  regional  governance.  Firstly,  regional  institutional 
capacities are not sufficient. The agendas for regional integration of most ACP regions are 
fairly ambitious and/or precise, but implementation is weak and hampered by the coordination 
ability  of  regional  organisations  and/or  national  governments.  For  example,  the  CEMAC 
Commission  employs  only  39  employees  and  61  execution  agents  for,  yet  the  ambitious 
integration  agenda  proposes  to  unite  35m  people  across  6  countries.  While  improving 
capacity should be a primary objective, it is also important that ACP states design the most 
appropriate  regional  integration  agendas  with  a  realistic  degree  of  ambition  that  will  work 
best in the specific regional ACP context. 

Secondly,  a  wealth  of  regional  organisations  exists  (see  Annex  1).  The  RECs  often  have 
overlapping  agendas,  mandates  and  memberships  and  /  or  too  weak  structures  and  political 
weight. In Africa, a rationalisation exercise of the RECs is being undertaken by the African 
Union and NEPAD and the long-term aim is continental integration (e.g. a continental free-
trade area in Africa).  

However, the question remains as to how far this rationalisation process can actually go and 
what progress can be achieved in the short term given the differences in focus that sometimes 
exist  between  the  AU  formally  recognised  organisations  and  the  actual  capacities  and 
mandates  to  deliver  on  an  active  economic  and  functional  cooperation  (see  Table 
below).Table 6: Overview of African regional organisations 

Eco. 

Focus 
Fun. 

Pol. 

EC-ACP co-operation 
Fun. 
Eco. 

Pol. 

AU 
recognised 

West Africa 
UEMOA 
(Benin,  Burkina  Faso,  Cote  d'Ivoire,  Guinea-Bissau, 
Mali, Niger Senegal, Togo) 
ECOWAS 
(UEMOA  +  Cape  Verde,  Gambia,  Ghana,  Guinea, 
Liberia, Nigeria, Sierra Leone) 
CILSS 
(Burkina  Faso,  Cape  Verde,  Chad,  Gambia,  Guinea 
Bissau, Mali, Mauritania, Niger, Senegal) 
Central Africa 
CEMAC 
(Cameroon,  Central  African  Republic,  Gabon, 
Equatorial Guinea, Rep. Congo, Chad) 
ECCAS 
(CEMAC + Angola, Burundi, DCR, Sao Tome) 
ESA 
IGAD 
(Djibouti,  Eritrea,  Ethiopia,  Kenya,  Somalia,  Sudan, 
Uganda)  
EAC 
(Burundi, Kenya, Rwanda, Tanzania, Uganda) 
IOC 
(Comoros,  La  Reunion,  Madagascar,  Mauritius, 
Seychelles) 
COMESA 
(EAC  –  Tanzania,  IGAD  –  Somalia,  IOC  –  La 
Reunion, + Angola, DCR, Egypt, Malawi, Swaziland, 
Zambia, Zimbabwe) 
Southern Africa 
SACU 
(Botswana, Lesotho, Namibia, RSA, Swaziland) 
SADC 
(SACU  +  Angola,  DCR,  Madagascar,  Mauritius, 
Malawi,  Mozambique, 
Zambia, 
Zimbabwe)  
North Africa (non-ACP) 

Tanzania, 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

17 

EN 

O 

O 

O 

O 

O 

O 

* 

O 

O 

O 

O 

O 

O 

O 

O 

* 

* 

O 

Cap 

Cap 

O 

O 

O 

O 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AMU 
(Algeria, Libya, Mauritania, Morocco, Tunisia) 
Inter-regional 
CENSAD 
(Benin, Burkina Faso, Burkina Faso,  
Central  African  Republic,  Comoros,  Côte  d'Ivoire, 
Djibouti,  Egypt,  Eritrea,  Gambia,  Guinea,  Guinea-
Bissau, Ghana, Libya, Liberia, Mali, Morocco, Niger, 
Nigeria,  Senegal,  Sierra  Leone,  Somalia,  Sudan, 
Chad, Togo, Tunisia) 
Notes: 

X 

X 

O 

O 

Eco. : Economic integration 
Fun. : Functional cooperation 
Pol. : Political cooperation 
Cap. :  Co-operation in capacity building  * 

X 
X 
O 

Key focal area 
Minor focal area 
Area of EC-ACP co-operation 

Minimal EC-ACP co-operation 

Finally, there is insufficient ownership and diversity of stakeholders. Putting in place trade 
liberalisation  and  integration  policies,  plus  broader  co-operation  requires  strong  political 
commitment to regional integration, a strong institutional and legal system, the awareness of 
all stakeholders (e.g. business, trade unions, civil society) and the convergence of their views. 
These pre-conditions do not always exist in ACP countries. The processes rely too often on 
general declarations by national leaders, without in-depth ownership by a wide range of actors 
such as national politicians, administrations, parliaments, business and non-state actors. The 
results  of  the  public  consultation  back  up  the  idea  that  broader  stakeholder  participation  is 
required. 

3. 

WHY DOES THE EU CARE? 

Progress and difficulties in ACP regional integration are of strong interest for the EU. One of 
the objectives of EU development policy is to help developing countries to integrate into the 
world  economy,  together  with  the  sustainable  economic  and  social  development  of 
developing  countries  and  the  fight  against  poverty  (Article  177  EC  Treaty).  The  EU  sees 
regional integration as a vehicle for smooth integration into the global economy and therefore 
lends  its  support  to  regional  integration  in  developing  countries.  This  is  a  long  standing 
feature7 of EU policy and that is particularly the case for ACP countries. 

Conversely,  the  economic,  social  and  environmental  challenges  facing  ACP  regional  efforts 
may  weaken  efforts  to  reduce  poverty  and  to  foster  sustainable  development  of  ACP 
countries, and eventually counteract action supported by the EU. 

3.1. 

EU-ACP relations and regional integration: an ancient partnership 

Conceptually, there are several ways of conducting relations with third countries. These can 
be  held  principally  in  multilateral  fora,  on  a  bilateral  basis  with  each  individual  country,  or 
with  regional  groupings  of  countries  arranged  according  to  political,  geographical  or  other 
interests. These levels are, of course, not mutually exclusive.  

The EU-ACP relationship is, for historical reasons, not run primarily on a multilateral basis. 
A  long-standing  relationship,  it  formally  began  in  March  1957  with  the  signature  of  the 
Treaty of Rome, which made special allowances for the then-called Overseas Countries and 
Territories  (OCTs)  of  the  European  signatories  of  the  Treaty.  Since  then,  these  countries 

7 

Communication  on  European  Community  support  for  regional  economic  integration  efforts  among 
developing countries, COM (1995) 219 final, 16.06.1995. 

EN 

18 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
became independent, but provisions were made to preserve the special economic relationships 
inherited from the past and to promote their economic and social development. Hence a first 
generation of association agreements with largely francophone former colonies in the form of 
two "Yaoundé Conventions" (1963 and 1969), and later, following UK accession in 1973, a 
second  generation  of  agreements,  the  "Lomé  Conventions"  (1975,  1980,  1985,  1990) 
extending this special relationship to former British colonies in Africa, the Caribbean and the 
Pacific.  

Therefore, since the  origins  of the EC itself, a special relationship between  Europe  and 
the  ACP  countries  as  a  group  has  been  developed.  It  encompasses  trade  arrangements, 
economic  and  technical  assistance,  development  assistance  and,  increasingly,  political 
dialogue and the protection of fundamental rights. For a long period of time, these successive 
conventions,  that  gradually  expanded  into  new  areas,  remained  the  most  far-reaching, 
elaborate and complex North-South contractual agreement, and were held as the flagship of 
EU development policy and external relations. 

This  special  relationship  with  a  group  of  developing  countries  remains  at  the  core  of  EU 
development  policy.  It  is  recognised  as  such  by  the  EC  Treaty  itself  (Article  178(3)).  Even 
when the EU was critically looking at the experience of the past and exploring new ways for 
the  future8,  the  multilateral  option  which  would  replace  any  bilateral  arrangements  with  the 
ACP as a group or individually or regionally – i.e. going back on 40 years of special EU-ACP 
relations – was not contemplated.  

EU  relations  with  ACP  countries  have  traditionally  been  conducted  within  a  collective 
framework,  the  successive  Lomé  and  Cotonou  conventions,  but  in  practice,  mainly  at  the 
national level. This is the case for most Cotonou  instruments:  Political dialogue takes place 
mainly  with  national  governments;  development  assistance  has  been  mostly  spent  through 
National  Indicative  Programmes  (NIPs)  that  respond  to  national  Country  Strategy  Papers 
(CSPs); under Cotonou and until 31 December 2007, EU-ACP trade relations were governed 
by a unilateral EU trade regime towards ACP countries individually. 

However,  a  purely  bilateral  relationship  with  each  individual  country  is  an  option  that  has 
been discarded for a long time. Countries of the ACP group, and in particular of each of the 
sub-regions  –  Sub-Saharan  Africa,  Caribbean,  Pacific  –  have  common  political,  economic, 
social  and  geographic  characteristics  that  make  cooperation  with  them  as  regions  or  as  a 
group  more  effective:  general  political  undertakings  shared  by  all;  a  single  financial 
instrument (the European Development Fund) and the same financial procedures; and shared 
goal to reduce poverty and integrate into the world economy through a number of key policy 
areas (such as economic and financial cooperation, human and social development, improved 
governance).  

This  is  why  regional  integration  has  been  supported  by  the  EU-ACP  partnership 
agreements already since the second Lomé Convention (1979)9. The regional dimension of 

8 

9 

Commission Green Paper on Relations between the European Union and ACP Countries on the eve of 
the 21st century – Challenges and Options for a new Partnership, COM(1996)570 final, 20.11.1996 
Article 133 of the Lomé II Convention already established that "in the implementation of the financial 
and technical cooperation, the Community shall provide effective assistance for attaining the objectives 
which  the  ACP  States  set  themselves  in  the  context  of  regional  and  inter-regional  cooperation.  This 
assistance shall aim to: 

EN 

19 

   EN 

 
                                                 
 
the  EU-ACP  cooperation  is  seen  as  a  necessary  complement  to  its  national  component.  In 
effect, the general objectives of EU-ACP cooperation as set out in the Cotonou agreement 
(Article  19)  are  poverty  reduction,  sustainable  development  and  integration  into  the  world 
economy  as  the  overarching  aims  of  the  partnership.  In  order  to  achieve  them,  regional 
integration  and  cooperation  is  one  of  the  fundamental  areas  of  interest  of  the  Cotonou 
agreement.  Among  the  overall  objectives  of  the  partnership,  "regional  and  sub-regional 
integration  processes  which  foster  the  integration  of  the  ACP  countries  into  the  world 
economy  in  terms  of  trade  and  private  investment  shall  be  encouraged  and  supported" 
(Article 1). To this effect, "cooperation support shall aim to:  

(1) 

(2) 

(3) 

(4) 

foster the gradual integration of the ACP States into the world economy;  

accelerate  economic  cooperation  and  development  both  within  and  between  the 
regions of the ACP States;  

promote the free movement of persons, goods, services, capital, labour and technology 
among ACP countries;  

accelerate  diversification  of  the  economies  of  the  ACP  States;  and  coordination  and 
harmonisation of regional and sub-regional cooperation policies; and  

(5) 

promote and expand inter and intra-ACP trade and with third countries." (Article 28).  

In addition, protection of the environment and natural resources, as well as enhancing the role 
of  non-state  actors,  are  cross-cutting  issues  that  should  also  be  pursued  at  regional  level 
(Article 32). 

This makes the EU a unique partner of ACP as most other bilateral or multilateral actors of 
development  policy  have,  until  now,  not  placed  the  same  emphasis  on  regional  integration. 
Indeed, some have virtually no operations at regional level.  

USAID has regional programmes in all areas of Sub-Saharan Africa plus the Caribbean, and 
works with a variety of partners including RECs such as EAC and ECOWAS across a range 
of areas relevant to regional integration. These regional programmes have been in existence 
for several years. Aid for regional projects in 2007 totalled $72m for West Africa, $30m for 
Southern Africa, $28m for East Africa, $15m for Central Africa, $316m for "Africa regional 
aid" and $15m for the Caribbean.  

accelerate economic cooperation and development both within and between the regions of the 

accelerate diversification of the economies of the ACP States;  
reduce the economic dependence of the ACP States on imports by maximizing output of those 

a) 
ACP States; 
b) 
c) 
products for which the ACP States in question have real potential; 
d) 
obstacles which hinder the development and integration of those markets; 
e) 
f) 
g) 
integration; 
h) 
respect of transport and communications." 

create sufficiently wide markets with the ACP States and neighbouring States by removing the 

promote  and  expand  trade  between  the  ACP  States  and  with  neighbouring  third  countries; 
maximize the use of resources and services in the ACP States; 
strengthen  organizations  set  up  by  the  ACP  States  to  promote  regional  cooperation  and 

implement  specific  measures  in  favour  of  the  land-locked  and  island  countries,  notably  in 

EN 

20 

   EN 

 
                                                                                                                                                         
 
 
 
 
Canada has a "Pan African" programme which primarily supports institutions in building their 
capacity  and  structure.  The  support  is  limited  to  financial  support  and  the  organisations 
themselves must propose (and then implement) projects with a regional impact. CIDA quotes 
the African Union as a partner for this program. None of the RECs appear to be partners at 
present, and there is no direct focus on regional integration.  

Japanese  assistance  to  Africa  is  limited  to  a  handful  of  countries,  and  does  not  include  any 
clear  regional  development  initiative.  Assistance  to  the  Pacific  is  more  developed  but  still 
does not appear to contain any regional aspects. 

The World Bank has recently adopted its "Regional Integration Assistance Strategy for Sub-
Saharan Africa". On regional integration, the EU seems to be "leading by example" since the 
concepts and ideas developed in this document are very much in line with what the EU has 
been doing for long on regional integration. 

Overall,  the  trend  towards  an  increased  focus  on  the  regional  level  is  now  established  as 
witnessed  by  the  number  of  important  development  partners  who  are  developing  regional 
strategies This fact, in itself, confirms the need for further regional integration in the current 
global climate. 

3.2.  More and better can be done 

While  development  co-operation  is  a  shared  competence  between  the  EU  and  its  Member 
States,  the  EU  has  a  key  role  to  play  in  supporting  regional  integration  through  its 
development  policy.  The  EU's  own  experience  with  regional  integration  makes  it  a  natural 
partner for regional organisations in ACP regions and it has developed significant experience 
and  expertise  in  dealing  with  regional  organisations  and  regional  matters  in  developing 
countries.  In  addition,  as  in  all  areas  of  development  cooperation,  the  EU  has  a  key  role  to 
play in the co-ordination of Member States' efforts to increase aid effectiveness. 

The EU has been very responsive to the trend towards enhanced regional integration in ACP 
countries. Many recent EU initiatives and policies seek to support this process, in particular: 
the regional strategies for Africa (October 2005), the Caribbean (March 2006) and the Pacific 
(May 2006), and the Joint EU-Africa Strategy of December 2007; the negotiation of region-
to-region Economic Partnership Agreements (EPAs); the EU-Africa Infrastructure Partnership 
focused  on  network  interconnectivity;  the  programming  of  the  10th  European  Development 
Fund  (EDF)  and  the  increase  of  Regional  Indicative  Programmes  (RIPs)  therein;  the 
promotion  of  dialogue  and  cooperation  with  European  outermost  regions  and  overseas 
countries and territories (see Annex 7 for the full references of these documents).  

3.2.1.  The need for a consolidated EU vision 

However,  more  can  be  done  to  make  this  partnership  between  the  EU  and  ACP  more 
effective. There is need for a consolidated vision, at EU level, of regional integration from a 
development point of view, as well as the necessity to better identify key challenges and tools 
in order to make EU policies in support of regional integration more effective. Three issues 
are critical in this regard. 

First, there is a need to deepen the approach to regional trade integration, and adapt it to 
today's  trading  reality.  While  it  remains  essential  that  tariff  and  non  tariff  trade  barriers  be 
lifted on a regional level, and to support ACP capacities to do so, it is also important to reflect 

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on the most appropriate ways to fulfil the Cotonou objectives to cooperate in other areas of 
regional  dimension,  such  as  trade  in  services  (including  maritime  transport  and  information 
and  communication 
rights, 
standardisation  and  certification,  customs  legislation  and  procedures,  and  sanitary  and 
phytosanitary standards. 

technologies),  competition  policy, 

intellectual  property 

Second, it is necessary to develop a more consistent and articulated EU vision of the role of 
policy cooperation in a number of areas which are essential to bring forward the concept of 
sustainable  regional  integration  and  protection  of  regional  public  goods  (agriculture,  food 
security,  environment  and  natural  resources  management,  disaster  risk  management,  health, 
higher education, research and development, rules aspects of business development). There is 
also  a  need  to  establish  a  better  linkage  with  the  key  political  ingredients  for  sustainable 
regional integration, notably peace and security. In all these areas, it is important to identify 
what needs to be done at which institutional level (continental, regional, national) and what is 
the role of the regional level. 

Finally, it is appropriate to review the tools with a view to enhancing their complementarity 
and  efficiency.  Policy  tools  at  EU  level  are  diverse  (development  policy,  trade  policy, 
political dialogue), and the most appropriate policy mix needs to be developed to ensure its 
efficiency as well as its adequacy with varied regional realities. These tools need also to be 
complementary  and  coordinated  with  EU  Member  States  and  other  donors'  activities  in 
support to regional integration, in order to develop the principles of aid effectiveness also in 
the  context  of  regional  interventions.  The  10th  EDF  Regional  Strategy  Papers  (RSPs)  will 
provide the basis for the Commission and EU Member States to support regional integration 
in a coordinated fashion. 

3.2.2. 

Setting out the objectives 

A  reinforced  EU-ACP  partnership  in  support  of  regional  integration  should  pursue  the 
following objectives: 

–  Reinforce the link between regional integration/cooperation and growth generation. The 
objective is to strengthen the impact of accelerated and deeper market integration (and 
of all forms of regional cooperation) on growth and poverty reduction.  

–  Reinforce  the  sustainability  of  the  outcomes  of  increased  economic  integration.  This 
means  reinforcing  cooperation  with  a  view  to  protecting  and  delivering  key  regional 
public goods. This implies strengthening support for the integration agenda of the various 
regions and for their regional policies aiming to deliver these public goods.  

–  Strengthen  the  efficiency  of  regional  governance,  both  at  regional  level  and  at  national 
level.  This  requires  a  more  streamlined  organisation  of  regional  agendas,  increased 
capacity building at regional and national level, and broader stakeholder participation 
at regional and national level. 

–  Strengthen political dialogue and joint understanding between the EU and ACP countries 
and regions on the merits and objectives of regional integration, notably on the basis of EU 
experience.  This  means  going  beyond  delivering  financial  assistance  and  develop  new 
ways of working together toward more regional integration 

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Enhanced  efforts  to  achieve  the  above  objectives  should  also  pursue  more  operational 
objectives, notably: 

–  Maximise the efficiency of the new generation of the 10th European Development Fund 
(EDF)  programmes,  and  in  particular  the  regional  programmes,  with  a  view  to  better 
leveraging regional economic development through clearly identified priorities for regional 
intervention,  based  on  the  regions'  own  agendas  and  a  review  of  past  implementation 
methods an increased coordination of EDF programming; 

–  Identify key issues for supporting the implementation of a major element of the EU-ACP 
relationship, i.e. the Economic Partnership Agreements (EPAs). The EPAs are aimed at 
strengthening  regional  integration  by  building  upon,  supporting  and  fostering  existing 
integration  processes.  There  are  challenges  that  need  to  be  addressed  as  regards  the 
capacity of ACP economies and structures to implement and adjust to the EPAs.  

–  Enhance  the  efficiency  of  EU  assistance  (including  outside  EDF)  with  increased 
coordination  and  complementarity  of  Community,  Member  States  and  other  donors' 
support.  Regional  programmes  (RIPs)  will  serve  as  a  basis  for  this  coordination.  On  the 
basis  of  the  European  Consensus  for  Development,  improving  coordination  between  EU 
donors is a key objective for EU development policy – and a key to its success.  

Figure  1:  Problem  tree  linking  general  objectives,  challenges  and  specific  objectives 

F
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(a)
(a)
Integration of ACP 
Integration of ACP 
states into world 
states into world 
economy
economy

(e)
(e)
Promote inter 
Promote inter 
and intra ACP 
and intra ACP 
trade with 3rd
trade with 3rd
countries
countries

(b)
(b)
Accelerate ACP 
Accelerate ACP 
inter and 
inter and 
intraregional 
intraregional 
economic co-
economic co-
operation 
operation 

(c)
(c)
Free factor 
Free factor 
movement
movement

(d1)
(d1)
Accelerate 
Accelerate 
diversification 
diversification 
of economies
of economies

(d2)
(d2)
Harmonise 
Harmonise 
policies
policies

(i)
(i)
Weak 
Weak 
complementary 
complementary 
partner economies
partner economies

(ii)
(ii)
Policies not 
Policies not 
effective outside 
effective outside 
trade
trade

(iii)
(iii)
Poor infrastructure 
Poor infrastructure 
networks
networks

(iv), (v), (vi)
(iv), (v), (vi)
Weak governance
Weak governance
Weak institutional capacity 
Weak institutional capacity 
Excess of ROs
Excess of ROs
Insufficient stakeholder 
Insufficient stakeholder 
ownership & diversity
ownership & diversity

Deeper market 
Deeper market 
integration through 
integration through 
integration-growth 
integration-growth 
link
link

Reinforce 
Reinforce 
sustainability and 
sustainability and 
key regional public 
key regional public 
goods
goods

Key
Key
Key

Strengthen EU / 
Strengthen EU / 
ACP dialogue
ACP dialogue

Efficiency in governance
Efficiency in governance
Streamline Organisations
Streamline Organisations
Capacity building
Capacity building
Broader stakeholder 
Broader stakeholder 
participation
participation

Primary relationship
Primary relationship
Primary relationship
Secondary or indirect relationship
Secondary or indirect relationship
Secondary or indirect relationship

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4. 

THREE POSSIBLE APPROACHES FOR EU SUPPORT 

Considering that the regional integration agenda is set by the ACP countries themselves, EU 
support  must  aim  specifically  at  supporting  the  regional  integration  process  in  ACP 
countries, i.e. helping ACP regions reach the goals they have set for themselves. Ownership 
is a central principle of the partnership between the EU and ACP countries and regions. The 
EU is therefore not in a position to make choices about regional integration in ACP countries. 
In a context of limited financial resources, it can, however, decide, among the choices made 
by  ACP  regions,  which  approach  it  will  support  as  a  priority  in  order  to  best  achieve  the 
objectives presented in Section 3.2. 

Conceptually, three approaches for EU support to regional integration in ACP countries can 
be  envisaged:  elimination  of  barriers  to  trade;  policy  coordination  to  foster  sustainable 
development;  political  cooperation  to  ensure  the  effectiveness  of  regional  integration.  They 
are  presented  here  as  separate  concepts  because  each  one  has  specific  results  that  it  is 
important to evaluate. In reality, policies are a complementary and mutually reinforcing mix 
of these three approaches, as shown in section 5. This mix is, and will remain, different in 
each region, as it depends on a region's own priorities.  

4.1. 

Elimination of barriers to trade10 

This approach is what has most often been referred to as "regional integration" and defined as 
the reduction of policy barriers to the movement of goods, services, capital and persons with 
the elimination of tariff and non-tariff barriers to trade, the removal of obstacles to investment 
from regional partners and the facilitation of payments at the centre. This approach was the 
main  focus  of  the  1995  Commission  Communication,  and  is  reflected  in  Article  29  of 
Cotonou  agreement  on  "regional  economic  integration"11.  It  heavily  builds,  although  not 
exclusively, on trade policy and trade agreements between regional partners. 

There  is  still  plenty  of  scope  for  more  effective  trade  integration  in  ACP  countries.  While 
regional agendas are ambitious (see Annex 1), implementation generally lags behind.  There 
is, in particular, a potential for progress to be made in the following areas: 

10 

11 

This approach is usually referred to in the academic literature as "negative integration". This is a neutral 
phrase  that  is  used  (often  in  an  EU  context,  but  not  exclusively)  to  describe  the  form  of  integration 
based mainly on the reduction / abolition of barriers, as opposed to "positive integration", which implies 
the approximation or harmonisation of laws and standards. These expressions being descriptive, they do 
not convey any judgement on the merits of either form of integration. 
"Cooperation shall, in the area of regional economic integration, support: 
a. developing and strengthening the capacities of: 
-  regional  integration  institutions  and  organisations  set  up  by  the  ACP  States  to  promote  regional 
cooperation and integration, and 
- national governments and parliaments in matters of regional integration; 
b.  fostering  participation  of  Least  Developed  Countries  (LDC)  ACP  States  in  the  establishment  of 
regional markets and sharing the benefits therefrom;  
c. implementation of sectoral reform policies at regional level; 
d. liberalisation of trade and payments; 
e.  promoting  cross-border  investments  both  foreign  and  domestic,  and  other  regional  or  sub-regional 
economic integration initiatives; and 
f. taking account of the effects of net transitional costs of regional integration on budget revenue and 
balance of payments." 

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–  Effective  implementation  of  all  regional  trade  liberalisation  commitments  (FTAs, 
customs  unions)  at  national  level  is  essential  for  the  benefits  of  regional  integration.  As 
highlighted in the public consultation, this is the prime area where regional integration can 
deliver benefits and help attain development objectives. Protectionism and concerns about 
national sovereignty need to be overcome for these benefits to accrue. Regional trade will 
spur  local  competition  as  cheaper  imports  from  regional  partners  will  lower  the  price  of 
agricultural  and  industrial  inputs,  as  well  as  of  household  products.  As  far  as  customs 
unions  are  concerned,  the  correct  implementation  of  external  regional  duties  is  as 
important as the free circulation of goods as it allows the region to protect its industry and 
agriculture  as  appropriate,  to  collect  public  revenue  (sometimes,  as  in  UEMOA,  for  the 
benefit of regional organisation) and to maintain the delicate regional balance of costs and 
benefits from openness to the rest of the world.  

–  Services:  most  ACP  regions  have  not  advanced  much  in  liberalising  services  between 
themselves. As a result, there are currently no real regional markets for services. Wherever 
regions engage in building up such regional markets, however, they are likely to draw very 
large benefits – if commitments are effectively implemented. Indeed, whereas services are 
essential to any economy, regardless of its level of development, the service sector remains 
underdeveloped  in  most  ACP  countries  and  the  excessively  high  cost  of  services  can 
sometimes increase the cost of industrial products by as much as 20%. Establishing more 
transparent,  stable  and  liberal  regional  rules  on  sectors  crucial  to  development  could 
considerably reduce the excessive costs currently borne by both businesses and consumers. 
infrastructure  service  sectors  such  as 
This 
telecommunications, 
the 
competitiveness of all businesses. The importance of lowering obstacles to regional trade 
in  financial  services  was  highlighted  in  the  public  consultation  as  a  crucial  way  of 
improving the business climate.  

insurance,  which  are  vital 

transport,  banking  and 

in  particular, 

the  case 

for 

is, 

to 

–  Investment:  investment  is  key  to  growth  and  development.  Lowering  or  abolishing 
regional  barriers  to  investment  can  strongly  contribute  to  a  more  dynamic  regional 
economy. Easier cross-border investment within a region acts as a multiplier of more open 
regional goods and services markets. Free capital movement within a region improves the 
allocation of capital and helps attracting FDI by offering improved security to investors, be 
they regional or outsiders. Solid and transparent regional rules are particularly important to 
rebalance economies and attract investment outside the traditional fields of mining and oil. 

–  Customs  and  trade  facilitation:  Complex,  diverse  and  inadequate  customs  procedures 
represent  an  important  obstacle  to  trade,  especially  to  intra-regional  trade,  in  developing 
countries.  This  is  particularly  true  in  relation  to  transit  procedures.  As  result  of  delayed 
deliveries, African countries tend to increase their inventory holding. Firm surveys among 
9  African  countries  found  that  firms  hold,  on  average,  the  equivalent  of  three  months  of 
input needs, which imposes heavy and unnecessary costs on  them. These reforms should 
be carried out at regional  level but appropriate capacities are needed in  national customs 
administrations to ensure a smooth implementation on the ground. 

–  Technical  barriers  to  trade  (TBT):  beyond  SPS  (see  box  below),  TBT  are  an  important 
impediment  to  regional  trade.  Lack  of  standardisation  leads  to  otherwise  unnecessary 
controls and restrictions to the free circulation of products, thereby reducing in practice the 
advantages of regional economic integration. Some of these technical barriers may indeed 
be  designed  to  restrict  competition  and  favour  local  producers  –  at  the  cost  of  local 

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consumers.  The  adoption  and  effective  implementation  of  regional  technical  rules  and 
standards is thus an important step to increase regional trade flows.  

Box 4: Sanitary and Phytosanitary Standards (SPS) 

The  experience  of  the  EU  shows  how  regional  integration  in  SPS  can  be  of  assistance  to 
development.  Unharmonised  SPS  act  as  a  significant  trade  barrier,  as  trade  in  food  and 
livestock  is  subject  to  costly  checks  and  certification  at  borders.  Harmonisation  therefore 
brings the benefits expected from trade integration including less price distortion, and higher 
quality  through  competition.  Harmonised  SPS  can  also  have  wider  effects.  They  provide  a 
mechanism  for  addressing  food  safety  on  a  regional  level.  Plant  and  animal  disease 
eradication  is  a  potential  regional  public  good  as  disease,  by  definition,  cross  borders. 
Naturally, to reach a high level of SPS integration requires not just harmonised policies, but 
also strong capacity at both regional and national level. 

The  Economic  Partnership  Agreements  (EPAs)  have  to  be  seen  under  this  approach  as  an 
important contribution in support of regional economic integration. They are an innovation as 
the previous trade instrument used (unilateral preferences granted by the EU) could not foster 
regional  integration:  the  Cotonou  trade  regime  was  granted  to  ACP  countries  on  a  national 
basis  for  their  imports  to  the  EU.  EPAs  are  different  in  that  they  are  negotiated  with  ACP 
regions and trade not only between ACP and the EU but also within ACP regions.  

To date (see Annex 3 for further details), the comprehensive EPA concluded with Cariforum 
has had a positive impact on regional integration in the Caribbean as the negotiating process 
itself has allowed the region to build common positions and to strengthen its own ambitions. 
The  final  text  covers  not  only  trade  in  goods,  but  also  technical  barriers  to  trade  (TBT), 
sanitary  and  phytosanitary  measures  (SPS),  investment,  trade  in  services  and  e-commerce, 
competition,  intellectual  property  and  public  procurement,  thereby  allowing  the  region  to 
develop and strengthen its own rules in all these important trade-related areas.  

In all other regions, the commitment to a comprehensive regional EPA has been renewed at 
the highest political level and negotiations are still going on. It has been noted, however, that 
the  negotiations  have  had  an  accelerating  effect  on  a  number  of  regional  projects  –  for 
instance  the  finalisation  of  the  ECOWAS  Common  External  Tariff  (CET).  Nevertheless,  in 
order  to  exploit  the  regional  potential  of  the  EPAs,  it  remains  a  priority  to  conclude  the 
negotiations.  

4.2. 

Policy co-ordination and co-operation for sustainable development12 

This  approach  focuses  on  what  could  be  called  the  deeper  policy  aspects  of  regional 
integration. It is fully reflected in Article 30 of the Cotonou Agreement13 and builds on other 

12 

13 

As far as laws, regulations and standards are concerned, this approach covers what is referred to in the 
academic literature as "positive integration" (see footnote 10).  
"1.  Cooperation  shall,  in  the  area  of  regional  cooperation,  support  a  wide  variety  of  functional  and 
thematic fields which specifically address common problems and take advantage of economies of scale, 
including: 
a.  infrastructure  particularly  transport  and  communications  and  safety  thereof  and  services,  including 
the development of regional opportunities in the area of Information and Communication Technologies 
(ICT); 
b. the environment; water resource management and energy;   
c. health, education and training; 

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types of cooperation often referred to as "functional cooperation", i.e. cooperation in policy 
areas which create the framework conditions for long-term development and sustainable 
interdependence  of  the  economies.  These  address  the  physical  barriers  to  intra-regional 
economic  flows  as  well  as  supporting  the  interdependence  of  the  economies  managing 
common resources or challenges.  

ACP regions and countries are more and more eager to go in this direction. They have put, or 
are putting, in place a number of initiatives and policies which deserve to be supported but are 
still at varying stages of development. 

4.2.1.  Reducing physical barriers through infrastructure networks 

Regional  cooperation  on  infrastructure  is  essential  to  ensure  the  interconnection  of  national 
networks.  Completing  the  "missing  links"  between  national  networks  is  vital  for  roads  and 
telecommunications as they are preconditions for intra-regional trade (see Figure 2). This is 
also  the  case  for  border  posts.  There  are  also  large  benefits  to  be  expected  from 
interconnection  of  energy  networks:  larger  electricity  networks  are  more  stable  and  more 
reliable and pooling resources allows conducting larger projects (e.g. dams) for the benefit of 
the whole region.  

Most of key growth constraints have a regional dimension, and if they were overcome, growth 
would  likely  increase  by  2-4  percentage  points.  There  have  been  various  studies  examining 
the economic rates of return on infrastructure projects, concluding that these rates tend to be 
high  –  but  a  regional  functional  approach  is  often  needed  to  materialize  the  gains.  Some 
striking examples: 

–  There  is  at  present  a  severe  shortage  of  electricity-generating  capacity  in  Uganda.  This 

could have been overcome through the use of effective regional electricity grids.  

–  There are also regional constraints to rail. Uganda’s imports and exports make heavy use 
of the port in neighbouring Mombasa. The Uganda-Kenya railways operate under a private 
franchisee which needs more effective regional approaches towards safeguarding a stable 
investment environment in order to stimulate more investment. The rail link was broken at 
the time of conflict in Kenya with big effects for Uganda.  

–  In case of Mozambique, higher road user charges due to the country’s non-membership of 
COMESA have resulted in a reduced frequency of use of the Beira Corridor for Zambian 
transit  goods.  Due  to  non-implementation  of  the  COMESA  Yellow  Card  Insurance 
Scheme, transport costs in the Beira Corridor are 5-10% higher than in other corridors of 
the region. 

Figure 2: Trans-African Road Transport Corridors 

d. research and technological development;  
e. regional initiatives for disaster preparedness and mitigation; and 
f. other areas, including arms control, action against drugs, organised crimes, money laundering, bribery 
and corruption." 

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• 

4.2.2. 

Strengthening  interdependence  by  action  at  macro-economic  and  micro-economic 
level 

At  different  levels  (macro,  meso  and  micro),  economic  policy  coordination  is  seen  as 
important. Most regional organisations pursue an agenda of economic policy integration, but 
success  requires  objectives  to  be  set  and  mechanisms  for  their  implementation  which  are 
adequate for the region-specific context. Coordinating macroeconomic and structural policies 

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is important to avoid cross-border spillovers within regional economic communities that can 
be detrimental to the process of trade integration.  

At a more micro-economic level, reinforcing productive capacity building and improving 
business competitiveness and climate is key. The main weaknesses of the private sector in 
the  ACP  regions  (in  terms  of  productive  capacities,  financial  services  and  competitiveness) 
should  be  tackled  at  different  levels:  company,  national  and  regional.  The  relevance  of  the 
regional dimension, however, still seems to be underestimated by the main public and private 
actors  Beyond  the  trade  aspects  of  integration,  other  actions  are  relevant  at  regional  level: 
improvement  of  the  regulatory  environment  (such  as  company  law,  industrial  standards, 
competition  laws),  strengthening  of  productive  capacities,  development  of  financial  markets 
and improvement of financial regulations, promotion of inter-enterprise co-operation. Box 5 
shows that many of the issues for reducing the cost of doing business have a regional/cross-
country dimension as well as a national one. 

Box 5: The cost of doing business  

Obstacles  to  doing  business  in  the  SADC  were  identified  by  ASCCI  Regional 
Business Climate Survey in 2007. Many of them (marked *) are directly related to 
regional integration or the lack thereof. They were ranked as follows : 

- Crime, theft and corruption 
-  Customs  regulations,  procedures  and 
bureaucracy (*) 
- Exchange rate fluctuation  
- Lack of market information  
-  Lack  of  affordable  and 
reliable 
transportation  (road,  air  transport  and 
ports) (*) 
-  Economic 
uncertainty (*) 
-  Lack  of  transparency  of  rules  and 
regulations  
- Trade tariffs and customs charges (*) 
-  Legal  environment  (enforcement  of 
contractual and property rights) 

regulatory  policy 

and 

-  Business  licensing  and  operating 
permits 
- Access to land 
- Access to and cost of finance (*) 
- Business culture 
- Skills and expertise  
- Communication restrictions (*) 
- Insurance 
- Visa regulations (*) 
- Import-export licensing (*) 
-  Phyto-sanitary 
regulations (*) 
- Domestic content (*) 

and  veterinary 

In  particular,  institutions  responsible  for  implementation  and  respect  of  international 
standards,  like  specialized  technical  centres  and  laboratories,  controlling,  auditing  and 
certification bodies and training institutions are inexistent at national level - because of a lack 
of  critical  mass  -  or  are  small  and  do  not  possess  the  necessary  capacities  to  support  the 
companies, which, in consequence, affects their competitiveness.  

Box 6: The potential of regional cooperation in R&D 

In the area of research and development, while policies should be adapted to national 
capacities and specificities, the regional level is important to coordinate efforts, pool 
resources  and  exploit  economies  of  scale.  It  can  assist  in  important  areas  for 
development  such  as  consumer  protection,  food  security,  health  care  and 
environmental  sustainability.  This  is  why  the  African  Union  Commission  has 
launched  a  Science  and  Technology  Consolidated  Plan  of  Action.  Regional 
cooperation  is  also  essential  to  launch  large  projects,  such  as  the  African  Space 
Agency. 

Regional  economic  integration has also  an  impact  on  companies  R&D  policies  and 
therefore  competitiveness.  Literature  shows  that  increased  competition  could 
stimulate  investment  and  enhanced  efforts  to  improve  a  company’s  technological 
competitiveness,  and  better  access  to  inputs  might  promote  outsourcing  activities. 

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The empirical analysis shows that the impact on R&D investment after having joined 
a  regional  trade  agreement  is  driven  by  product  markets  rather  than  by  factor 
markets.  Thus,  regional  integration  promotes  increased  investment  in  companies’ 
internal R&D as well as increased purchase of external R&D. 

Moreover, the current situation is characterised by a fragile framework of inter-enterprise co-
operation at different levels. In this context, support for development of regional networks of 
business  intermediate  associations  and  promotion  of  regional  inter-enterprise  co-operation 
and investment can be more efficient than actions undertaken only at country level.  

Finally,  the  development  of  a  financial  sector  of  a  regional  dimension  would  improve  the 
conditions of access to credit institutions for ACP companies, in particular SMEs, and would 
therefore contribute to the improvement of their competitiveness. 

4.2.3.  Management of common resources or challenges 

Tackling challenges of a trans-national dimension at regional level can be more effective than 
national policies alone, or a necessary complement to maximise their efficiency. 

This  is  the  case  to  improve  food  security:  better-functioning  regional  markets  for  food  and 
agricultural inputs, regional alert systems, improved regional transport infrastructure and the 
constitution of regional stocks can all provide a contribution to improved food security.  

On  agriculture,  the  regional  –  and,  as  far  as  Africa  is  concerned,  continental  –  levels  can 
provide  a  significant  value  added,  notably  on:  the  strategic  integration  of  agriculture  in 
development  agendas;  agricultural  research  (improved  synergies,  access  to  knowledge); 
policy harmonisation between the various levels; livestock development and disease control ; 
and risk management. 

Similarly,  in  response  to  the  serious  development  and  cross-border  challenges  of 
communicable  diseases,  notably  HIV/AIDS,  malaria  and  tuberculosis,  ACP  countries  are 
cooperating  at  regional  levels  in  policy  development  and  horizontal  technical  collaboration. 
On HIV/AIDS, both SADC and CARICOM have, with support of the European Commission, 
implemented regional support programmes for responses to the pandemic.  

Environmental issues and climate change generally have an impact across borders, not the 
least  because  natural  resources  are  often  shared,  and  should  therefore  be  considered  as 
regional  public  goods.  In  the  area  of  climate  change  there  are  particular  arguments  for 
regional cooperation to deal effectively with adaptation and related subjects such as disaster 
risk  reduction:  research  on  drought  resistant  crops,  early  warning  for  floods  and  droughts, 
insurance mechanisms, for instance, can all better function at regional level. Hence there are 
sizeable  benefits  from  regional  cooperation  and  policy  coordination  in  the  area  of 
environment  policy.  A  number  of  RECs  have  real  responsibilities  in  this  area  but  there  has 
also been a tendency towards the ad hoc creation of separate specialised agencies. 

Finally, there is an argument to deal with increasing disparities (cohesion) at regional level. 
Regions  are  increasingly  considered  to  be  the  appropriate  level  to  reconcile  economic 
openness  with  social  cohesion.  Regional  policies  are  also  likely  to  increase  a  sense  of 
solidarity  within  a  region.  Two  aspects  are  present  here.  The  first  is  the  impact  of  regional 
integration  on  the  weaker  territories.  As  explained  above,  regional  economic  integration  is 
likely  to  bring  about  an  increased  concentration  of  wealth  in  a  limited  number  of  countries 

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and  regions.  A  cohesion  policy  at  regional  level  is  the  way  to  rebalance  the  benefits  of 
regional  integration  and  to  support  the  legitimacy  of  the  process,  in  particular  –  but  not 
exclusively  –  when  the  strengthened  and  (relatively)  weakened  territories  are  located  in 
different countries.  

The second aspect is the impact of regional integration on the weaker social groups. Regional 
integration is strengthened by cross-border social regulations, redistribution mechanisms and 
the  articulation  of  regional  social  rights,  as  well  as  by  cross-border  cooperation  in  health, 
education  and  social  protection  policies.  Policies  to  address  issues  of  cross-border  migrant 
labour are of particular importance. Regions may adopt a number of instruments to enhance 
the  social  dimension  of  their  region  including  laws,  funds  and  intra  regional  social  policy 
dialogue.  

4.3. 

Developing political co-operation for effective regional integration 

This third approach examines what conditions are required in order for regional integration to 
be effective. It is reflected in Article 30 of Cotonou Agreement14 and essentially concerns the 
political factors surrounding regional integration, such as: 

–  The  actual  and  potential  relationship  among  partners:  existence  of  genuine  common 
interests, trust and interdependence; compatible historic, cultural and political patterns;  

–  The  internal  political  and  economic  situation  in  partner  countries:  sovereignty,  political 

commitment, peace and security;  

–  Factors  facilitating  the  success  of  regional  integration:  rule  of  law,  democracy  and 

democratic governance.  

The above factors are regarded more and more as important areas of intervention by the EU, 
and  EU  support  is  highly  valued  by  ACP  partners,  but  action  remains  stove-piped, 
disconnected  from  the  continental  political  framework.  There  is  also  a  need  for  coherence, 
especially  since  there  are  high  expectations  of  ACP  partners  and  a  positive  impact  on 
development is expected in this area. It is particularly the case of the three following areas, in 
which ACP regions are increasingly active. 

4.3.1.  Regional cooperation for peace and stability: 

The drivers of, and threats to, security, vary in nature and in geographical impact. Responses 
to  security  threats  depend  on  political  mandates  and  frameworks.  However,  it  is 
acknowledged  that  political  or  civil  instability  or  conflict  in  one  country  can  have  serious 
destabilizing effect in neighbouring countries. Preventing them and/or tackling them through 
regional cooperation or intervention is increasingly recognised as necessary.  

For the African continent, this is done through the continental political frameworks for peace 
and security in Africa. The EU is supporting these efforts through the Africa-EU Peace and 
Security Partnership within the Joint Africa-EU Strategy. The activities of the related Action 

14 

"3.  Cooperation  shall  help  promote  and  develop  a  regional  political  dialogue  in  areas  of  conflict 
prevention and resolution; human rights and democratisation; exchange, networking, and promotion of 
mobility between the different actors of development, in particular in civil society." 

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Plan  require  regional  engagement  and  support  for  their  implementation  as  well  as  for  the 
coherence of policies at continental level.  

In the Pacific, threats to stability are intra-state rather than inter-state and mainly due to the 
very  recent  accession  to  independence  of  most  Pacific  ACP  countries,  highly  fragmented 
ethnic  mix  in  most  Melanesian  countries,  inalienable  land  tenure  systems  and  population 
pressures.  The  Pacific  Islands  Forum  adopted  a  collective  security  declaration  in  2000,  in 
Biketawa,  Kiribati,  which  was  invoked  in  2003  with  regard  to  the  Solomon  Islands,  and  in 
2004  with  regard  to  Nauru,  and  allowed  the  Forum  to  assist  with  the  post-December  2006 
coup return to democracy in Fiji. In accordance with the EU Strategy for the Pacific adopted 
in  July  2006,  the  European  Union  is  strengthening  its  region-to-region  political  relationship 
through an annual Ministerial-level political dialogue. 

4.3.2.  Good governance as a regional good 

Strengthening  good  governance  is  essentially  a  matter  for  national  governments  and 
institutions. However, there is also recognition that there are mutual benefits of a dialogue at 
regional level on progress made in various countries so as to spread the benefits of improved 
governance.  

The African Peer Review Mechanism (APRM) is a mutually agreed instrument voluntarily 
acceded to by the member states of the African Union (AU) as a self-monitoring mechanism. 
The  mandate  of  the  APRM  is  to  encourage  conformity  in  regard  to  political,  economic  and 
corporate  governance  values,  codes  and  standards,  among  African  countries  and  the 
objectives  in  socio-economic  development  within  the  AU  socio-economic  programme:  the 
New  Partnership  for  Africa's  Development  (NEPAD).  More  than  half  of  the  AU’s  53 
countries (29) have formally joined the APRM by signing the Memorandum of Understanding 
on the APRM. This shows that an increasing number of African countries are committed to 
governance  reforms  to  create  favourable  conditions  for  sustainable  development  and  that 
African-owned mechanisms have an important contribution to make to improve governance.  

4.3.3.  Harnessing the effects of migration 

Intra-regional  migration  or,  more  precisely,  intra-regional  labour-mobility  is  part  of  the 
collective  history  and  culture  of  many  developing  countries.  In  the  past,  this  phenomenon 
went  largely  unnoticed  by  policy  makers,  both  in  ACP  countries  and  in  the  EU.  With  the 
increasing importance of migration issues on the EU policy agenda, the call for 'well managed 
migration' has appeared at the forefront of cooperation and dialogue with ACP countries, not 
only  in  connection  with  migration  movements  to  the  EU,  but  also  in  its  intra-  and  inter-
regional ACP context. Since  2006 – the  launch  of the EU Global Approach on Migration – 
important  conferences  were  held  (Rabat,  Tripoli),  regional  processes  aimed  at  management 
and  facilitation  of  free  movement  of  people  were  strengthened  (notably  in  ECOWAS),  and 
many  national  and  regional  migration  management  capacity  building  initiatives  were 
launched. 

4.4. 

Comparing the approaches 

4.4.1.  Overview of advantages and drawbacks  

It is important to sketch out the advantages and drawbacks of the various possible approaches 
of EU support to regional integration, even from a theoretical point of view, as the analysis 

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needs  to  ensure  that  a  reinforced  partnership  in  this  area  will  effectively  deliver  on  the 
objectives of accelerating and deepening market integration in support of growth and poverty 
reduction;  protecting  and  delivering  key  regional  public  goods  in  view  of  reinforcing  the 
sustainability of regional integration; strengthening the efficiency of regional governance; and 
enhancing political dialogue and joint understanding between the EU and ACP countries with 
regard to regional integration. 

The following analysis tries to identify, from a qualitative point of view, the main economic, 
social  and  environmental  effects  that  can  be  expected  of  different  approaches,  while  also 
citing  empirical  studies  and  examples  from  both  ACP  and  non-ACP  regional  integration 
experiences.  These  effects  are  considered  in  isolation,  and  therefore  only  the  effects  of  an 
increased  focus  of  EU  support  on  the  chosen  option  are  considered.  However,  a  number  of 
drawbacks  arising  from  one  approach  may  be  minimised  if  a  number  of  policies  are  put  in 
place, either at regional or national level. Conversely, in order for the advantages of an option 
to accrue, accompanying policies need also to be put in place. 

The starting point is the current situation. Depending on the starting point in a given region, 
advantages and drawbacks from focussing EU support on a given approach will be different.  

The time horizon is important, and cannot easily be accommodated in an overview. A number 
of  policy  actions  at  regional  level  may  have  significant  costs  in  the  short-term  but  large 
benefits  in  the  longer  term.  This  is  typically  the  case  of  economic  reforms  deriving  from 
regional  integration:  while  the  benefits  of  the  abolition  or  diminution  of  tariffs  should  be 
delivered to a large number of people over the long-term, they will almost inevitably hurt a 
small number of protected sectors in the short-term.  

This  being  said,  the  three  possible  approaches  –  elimination  of  barriers  to  trade,  policy  co-
ordination  and  co-operation  for  sustainable  development,  and  political  co-operation  -  have 
distinctive  economic,  social  and  environmental  advantages  and  drawbacks.  These  can  be 
summarised as follows:  

Eliminating  barriers  to  trade  has  many  important  economic  advantages,  but  the  balance  is 
less clear in social terms and rather negative in environmental terms. The imbalance between 
large expected economic advantages and significant social and environmental drawbacks may 
raise  concerns  about  the  sustainability  of  the  first  approach  if  appropriate  measures  and 
policies are not in place to redress or prevent them. This is even more important given that the 
economic benefits will not be delivered in the short-term but in the medium- to long-term.  

Table 7: Elimination of barriers to trade – Advantages and drawbacks 

Economic 

Advantages 

Drawbacks 

The reduction or removal of tariffs will result 
in  lower  prices  for  goods  imported  from 
other  countries  in  the  region,  both  for 
producers  (including  exporters)  and  for 
consumers. 
The  reduction  or  removal  of  tariffs  can  lead 
to  increased  government  revenue  through 
and 
increased 
imports, 
consumption  (tariffs,  direct  and 
indirect 
taxes) 
Larger,  more  integrated  markets  are  open  to 

production 

Infant industries or small local companies in 
weaker  member  economies  may  suffer  from 
the 
increased  competition  from  stronger 
member  economies  or  from  multinational 
corporations (MNCs) 
In  the  short-term,  the  loss  of  revenue  from 
the  removal  of  tariffs  may  cause  funding 
problems  for  governments  unless  fiscal 
reform is implemented  
Effective  implementation  of  both  SPS  and 
international  standards  may  have  negative 

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/ 

in 

of 
and 

reduces  corruption 

the  right  conditions 

trade, 
to 
barriers 
computerisation  of 
trade 

more  competition,  which  will  lead  to  higher 
increased 
productivity,  lower  prices  and 
quality  (if 
legal 
framework  on  competition  are  in  place  and 
enforced)  
Larger,  more  integrated  markets  will  attract 
more  FDI,  with  a  positive 
impact  on 
productivity  
Cross-border flows will increase, which will 
foster specialisation, improve the division of 
labour  and  allow  the  development  of  larger 
regional 
associated 
companies,  with 
productivity gains  
removal 
The 
standardisation 
procedures 
matters. 
There  is  the  potential  for  a  rise  in  the 
importance  of  border  regions,  fuelled  by 
increased cross-border flows. 
Standard  of  living  should  rise  as  the  costs 
associated  with  the  transit  of  goods  falls, 
poverty 
should 
which 
to 
alleviation,  particularly 
land-locked 
countries. 
Employment  (and  possibly  salaries)  will 
increase in industries that grow because they 
produce  more  (as  a  result  of  increased 
exports  or  enhanced  overall  growth)  and  in 
industries that generate a higher productivity. 
This should contribute to poverty alleviation. 
The  effective  implementation  of  SPS  will 
improve food safety. 
The  removal  of  trade  barriers  can  have 
benefits 
food  security  as  agrifood 
products  should  more  easily  reach  regional 
markets. 
The  harmonisation  of  SPS  provides  the 
opportunity 
tackle  animal  and  plant 
diseases  on  a  regional  level  if  supporting 
policies  are  implemented  with  sufficient 
organisational capacity 

contribute 

for 

in 

to 

effects  on  certain  traditional  products  and 
production processes, affecting the livelihood 
of certain communities  

The  freer  movement  of  people  may  involve 
problems:  people  migrating  to  wealthier 
areas,  thus  generating  agglomeration;  easier 
cross-border  movement  could  allow  unrest 
and  security  problems  to  cross  borders; 
diseases  (e.g.  AIDS)  can  spread  more  easily 
along trade corridors. 
Regional  disparities  may  increase  as  regions 
with  greater  potential  profit  from  the  new 
economic opportunities, while poorer regions 
stagnate.  
Sectoral 
as 
economic sectors with greater potential profit 
from  the  new  economic  opportunities,  while 
other sectors stagnate. 
In  the  short-term,  there  is  a  risk  that  food 
flows  more  to  richer  and/or  urban  regions 
across  borders, 
to  food 
insecurity in poorer and/or rural regions.  

disparities  may 

thereby  adding 

increase 

result  of 

There  is  the  potential  for  damage  to  the 
environment  as  a 
increased 
economic  activity.  Examples  are:  increased 
air  pollution;  strain  on  water  resources; 
reduction  of  biodiversity;  overuse  of 
resources, illicit trade (ex. timber). 

Social 

Environmental 

What does empirical evidence say? 

–  In the non-ACP regions of the EC and Mercosur, regional integration was found to have 
raised intra-regional trade by 65% and 150% respectively. However, the mere reduction or 
elimination  of  tariffs  on  intra-regional  trade  will  have  fewer  effects  if  the  potential  for 
intra-regional trade is small, as is the case in Africa, where intra-regional trade covers only 
a small percentage of total trade, partly due to similar trade and production structures (in 
addition to informal, un-reported trade). It is therefore assumed that the ACP countries will 
mainly gain when moving towards deeper regional integration. 

–  RTAs encourage extra-regional FDI flows and for some regions intra-regional FDI, though 
it  is  not  always  clear  whether  this  is  because  of  trade  or  investment  agreements.  For 

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example,  one  study  found  that  the  increased  market  size  of  a  "Maghreb"  region  would 
increase FDI stocks by up to 165% for its member countries. One particular study found 
that membership of a region per se does not increase FDI, but that regions with sufficient 
trade  and  investment  provisions  will  help  to  attract  inwards  investment,  with  investment 
provisions in particular being effective as they provide positive signals to foreign investors. 
Because ACP regions (e.g. COMESA, ECOWAS) are only at the beginning of including 
investment  provisions  compared  to  other  regions  (e.g.  NAFTA  and  MERCOSUR)  the 
costs of non-integration in terms of attracting FDI can be considerable. 

–  Studies also show that different countries within a region experience different FDI related 
effects.  This  difference  reflects  variations  in  the  relative  size  of  the  industrial  sectors 
among  member  countries,  but  also  the  degree  to  which  economic  integration,  directly  or 
indirectly,  increases  the  locational  advantage  of  a  country  relative  to  other  member 
countries.  

–  Migration  provisions  in  the  ACP  are  most  advanced  in  the  CARICOM.  As  a  result,  the 
stock of Caribbean migrant workers within the region increased by 18% between 1990 – 
2000  And  CARICOM  nationals  account  for  over  one-half  of  all  flows  within  the  region 
(52%). Intra-regional migration has responded well to a relaxation in migration provisions 
in the Caribbean. 

–  A study of manufacturing firms in three ACP countries (Benin, Malawi and South Africa) 
found  that  exporting  firms  as  a  whole  have  higher  productivity  levels  than  domestically 
focused firms. The destination of export was not important for the productivity of firms in 
Benin and Malawi, while in South Africa, firms exporting intra-regionally were found to 
be more productive than those exporting to the rest of the world. The implication of these 
findings  is  that  increased  trade  and  investment  from  regional  integration  will  increase 
aggregate growth.  

–  There are a number of factors that may condition whether regional integration is associated 
with convergence or divergence of incomes amongst its members (but the size of the group 
is not relevant): integration of monetary policy, harmonisation policy, different institutions 
and  trading  rules;  labour  mobility;  macro  economic  convergence;  presence  of  a  sub-
regional development finance institution; and competitive advantage.  

–  While empirical evidence is slightly variable, it generally points to the fact that there is not 
a strong link between regional integration and income convergence. One particular study 
of  46  African  countries  assessed  the  level  and  rate  of  the  convergence  of  income  for  the 
members  of  SADC,  COMESA,  ECOWAS,  CEMAC  and  UEMOA.  The  link  between 
regional  integration  and  income  convergence  was  found  to  be  low.  Three  explanations 
were  given  for  this.  First,  the  slow  growth  of  output,  productivity  and  accumulation  of 
production  factors;  second,  the  low  levels  of  intra-regional  trade,  the  bias  towards 
commodity trade and the low factor mobility; and third, the limited inflow of FDI which 
further constrained capital accumulation. 

The  above  is  comforted  by  the  main  findings  of  the  Sustainable  Impact  Assessments  (SIA) 
conducted  in  the  context  of  the  EPA  negotiations  (these  can  be  found  on  the  following 
website: www.sia-acp.org). As EPAs aim at fostering intra-regional trade through a range of 
trade  and  trade-related  measures,  they  are  directly  contributing  to  the  elimination  of  trade 

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barriers as identified under Approach 1. Out of the twelve main recommendations highlighted 
in the SIA15, the following are particularly relevant:  

"1. The EU and ACP countries should strive to ensure coherence between EPA negotiating configurations and 
overlapping  efforts  at  regional  integration  and  should  ultimately  pursue,  at  regional  level,  strategies  for  the 
developing key economic and industrial sectors and for promoting sustainability. 

6.  The  EPAs  should  contribute  to  a  stable  climate  for  FDI  and  encourage  FDI  and  regional  investment  that 
support  sustainability  through,  inter  alia,  including  means  of  cooperation  to  achieve  compliance  with  the 
enforcement of environmental and social regulations at the national level. 

7. EU-ACP cooperation on standards should focus on addressing obstacles to trade, maintaining high levels of 
protection for consumers and the environment and assisting ACP countries to develop their own national and 
regional approaches to SPS and TBT. 

8.  The  EU  should  engage  in  ongoing  cooperation  with  the  ACP  in  several  areas  related  to  trade  facilitation 
including, inter alia, customs, transportation, technology, business information and human resources. 

9. Development cooperation should focus on priority needs for diversification of production and exports towards 
higher value-added products, with an emphasis on reinforcing economic and industrial sectors impacted by the 
EPAs, while ensuring the sustainability of new development. 

10. Development cooperation should focus on technical assistance to collect information and data on trade and 
sustainability to support sound policy development. 

11. Development cooperation should focus on capacity building to promote sustainable development in both the 
private  and  public  sectors,  with  an  emphasis  on  training,  research  and  development,  and  a  sound  regulatory 
framework." 

These recommendations point to two important directions:  

–  To enhance the benefits of EPAs and minimise their potential cost, there is a strong need 

for accompanying measures at regional and national level.  

–  Development  cooperation  should  be  broad-based  and  cover  areas  well  beyond  trade,  in 

particular regional rules for business and sustainable development.  

Policy  cooperation  and  coordination  in  a  number  of  key  areas  goes  some  way  towards 
neutralising the sustainability issues raised in approach 1. Like the first approach, the second 
approach  brings  many  economic  benefits.  Nevertheless,  in  order  to  fully  reap  the  economic 
benefits of approach 2, certain preconditions, which are largely encompassed by approach 1, 
are necessary. While negative social and environmental impacts are not on the same scale as 
under  approach  1,  there  are  still  some  issues,  though  social  issues  are  of  a  more  short-to-
medium term nature. 

Table 8: Policy co-ordination and co-operation for sustainable development  

Advantages 

Drawbacks 

Economic 

regional 

Improved 
rules  of  economic 
governance  will  bring  further  incentives  for 
the  associated 
intra-regional 
trade,  with 
lower  prices  for 
benefits 

terms  of 

in 

Environmental  protection  programmes  may 
restrain the economic opportunities of certain 
communities.  
In  the  short-term,  certain  local  businesses 

15 

See PriceWaterhouseCoopers (2007): Page 9 ff. 

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and 

consumer  goods  and  agricultural  and 
industrial inputs. 
Improved  regional  infrastructure  will  bring 
down  the  costs  of  consumer  goods  and 
agricultural and industrial inputs  
Infrastructure  hubs  and  corridors  can  be 
drivers  for  economic  development  (creation 
of 
industry  clusters  with  high  positive 
externalities). 
Larger and deeper regional financial markets 
will  improve  access  to  capital  and  improve 
the allocation of financial resources. 
Improved 
the 
competitiveness 
implementation  of  international  standards 
increase 
fuelling 
the  export  potential, 
economic growth.  
Macroeconomic  and  monetary  co-operation 
provides  a  more  stable  and  investment-
friendly environment, attracting FDI 
Improved,  harmonised  statistics  at  regional 
level  provide  a  sounder  basis  for  decision-
makers,  both  at  national  and  regional  level, 
thereby  reducing  the  risk  of  policy  failures 
(inadequate action).  
Redistribution initiatives will limit migration 
flows and levels of disparity. 
Food  security  should  be  improved  through 
co-operation in early warning systems. 
Co-operation  on  non-transport  infrastructure 
matters  should  provide  some  communities 
with  new  amenities  (access  to  energy,  clean 
water), increasing their standard of living. 
Tackling  human  diseases  in  common  will 
improve results.  

may  have  difficulties  to  conform  to  new 
standards. 

New  infrastructure  projects,  plus  corridors 
and  hubs  can  lead  to  the  displacement  of 
people as land is needed for the new project 
(the  displaced  are  more  likely  to  be  poorer 
rural communities). 
Macroeconomic  and  monetary  co-operation 
could have negative effects in the short term 
for  certain  groups  (difficulty  with  price 
adjustments,  understanding  new  currencies). 
The  experience  of  many  African  countries 
with  currency  re-numeration  demonstrates 
these issues (e.g. Ghana – the recent Cedi re-
numeration).  

increase 

resources 
Joint  management  of  natural 
sustainability.  Pooled 
should 
resources  can  be  managed  more  effectively 
(e.g. fisheries, water, forests, energy, dams). 
A 
regional 
infrastructure  will  prevent  the  overuse  of 
certain routes and the environmental damage 
which accompanies such overuse. 

co-operative 

approach 

to 

The  environment  may  be  damaged  through 
(e.g. 
new 
deforestation)  unless  environmental  impact 
assessments are carried out. 

infrastructure 

projects 

Social 

Environmental 

What does empirical evidence say? 

–  There is a dynamic relationship between trade agreements and other type of cooperation: 
countries  that  cooperate  most  extensively  with  each  other  on  trade  are  also  each  other's 
favoured partner for non-trade related cooperation. Therefore, trade cooperation paves the 
way  for  further  cooperation  in  areas  such  as  infrastructure  cooperation,  regional 
environmental protection or other political integration. 

–  While regional integration could improve the liquidity, efficiency and competitiveness of 
African  countries,  it  needs  to  be  carried  out  at  the  right  pace  and  in  a  pragmatic  way. 

EN 

37 

   EN 

 
 
 
 
National  financial  markets  must  be  developed  before  starting  to  integrate  them.  African 
financial  markets  could,  however,  benefit  from  closer  cooperation  including  cross-border 
listings and enhanced exchange of information and technology. 

–  Assessing  the  macroeconomic  indicators  within  the  ACP,  most  authors  do  not  find 
convincing  evidence  of  increasing  convergence  of  basic  macroeconomic  indicators;  a 
prerequisite  to  move  towards  a  monetary  union.  There  is  a  positive  correlation  between 
infrastructure provision and trade and growth. An increase of one standard deviation (from 
the mean) in the communications infrastructure raises the volume of trade by roughly 11 
percent, compared to a 7 percent effect on transport infrastructure and a 2 percent effect on 
trade  for  tariffs.  For  least  developed  countries  (LDCs),  transport  is  more  important  than 
communications. The effects of communications infrastructure on trade grows as a country 
reaches the middle income range. Upgrading a primary road network connecting the major 
83  urban  areas  in  sub-Saharan  Africa  would  expand  overland  trade  by  around  US$250 
billion over 15 years. The new Central African network, linking Chad, the Central African 
Republic and Cameroon, is expected to save US $86m per year. In the case of the Kenya-
Uganda transit corridor (linking Mombasa with Kampala) the average transit time had been 
reduced by 10 days to 15 days. 

–  As a result of regional liberalisation, truck utilisation in southern Africa has almost similar 
ratios as European haulers (8,000 to 12,000 km/month). In Central and West Africa, on the 
other  hand,  the  utilisation  is  as  low  as  2,000  km/month.  For  Zambia,  the  regional 
liberalisation  of  trucking  services  has  reduced  transportation  costs,  increased  foreign 
(mainly  South  African)  investment  in  the  trucking  industry,  and  increased  the  overall 
competitiveness of trucking services.  

–  There  is  no  alternative  to  regional  cooperation  for  African  countries  when  it  comes  to 
energy supply. The continent’s energy resources are concentrated in few countries where 
weak infrastructure and political conflicts make it difficult to access the resource. DRC and 
Ethiopia are accounting for about 60% of Sub-Saharan Africa’s hydroelectric potential but 
need  to  be  linked  to  the  economic  centres  of  their  region  in  order  to  attract  investment, 
enabling them exploiting their resource. The threshold of 400 MW, which is regarded as 
necessary  for  effective  thermal  power  generation,  is  only  met  by  14  countries  in  Sub-
Saharan Africa. 

–  Water is a scarce source in many ACP countries, and it is increasingly leading to conflicts. 
Effective regional management of water resources will therefore help to prevent conflicts. 
Cooperative development of water resources offers great opportunities to unlock economic 
growth  and  promote  regional  integration.  On  shared  river  systems,  the  use  of  water  in  a 
country  can  profoundly  affect  the  quality  and  quantify  of  available  water  in  downstream 
countries. Riparian countries must search for sustainable solution can allow the equitable 
sharing of the scarce resource. 

–  Enhanced  intra-regional  trade  and  cooperation  could  avoid  using  emergency  protective 
measures, such as export bans, and stabilise prices. While the consumer benefits of trade 
liberalisation are well-known there is also evidence that intra-regional trade liberalisation 
does  not  necessarily  harm  small-scale  agricultural  producers.  In  Senegal,  higher  tariffs 
have  not  resulted  in  higher  prices  for  farmers  but  were  absorbed  by  the  rent-seeking 
behaviour of traders and parastatals.  

EN 

38 

   EN 

 
–  For  land-locked  countries  the  management  of  grain  reserves  is  likely  to  be  more  cost-

effective on a regional basis than national stock holding 

–  Informal  agricultural  trade  is  estimated  at  well  above  20%  of  total  Sub-Saharan  African 
trade. Most informal trade is carried out to exploit the differences between national prices 
and international/regional prices and would be largely obsolete by free intra-regional trade 
and  a  regionally  harmonised  agricultural  policy.  Reduced  prices  in  turn,  are  likely  to 
stimulate  the  demand  of  poor  consumers,  thus  inducing  positive  growth  effect.  From  the 
Government’s point of view the incorporation of informal trade into registered trade flows 
is also desirable. 

Developing political cooperation to ensure effective regional integration has large economic 
benefits, as it provides the preconditions for other policies. Most notably, peace and security 
are an essential requirement for further development, and hence for approaches 1 and 2 to be 
effective.  Conversely,  peace  and  security  cooperation  at  regional  level  is  most  likely  to  be 
successful if countries are bound together by strong common interests, so that approaches 1 
and 2 also appear to be beneficial for approach 3. Yet, it should also be considered that peace 
and security are also influenced by national and international factors that cannot be controlled 
through action only at regional level. For this reason, while approach 3 is vital to sustainable 
development,  its  benefits  are  less  certain  and  no  amount  of  support  can  guarantee  that  they 
will be delivered in a sustainable manner.  

Table 9: Developing political co-operation for effective regional integration 

Advantages 

Drawbacks 

Deeper  political  integration  at  a  regional 
level  may  lead  to  changes/evolutions  of 
national 
to  which  some 
fractions  of  society  may  have  difficulty  to 
adapt. 

identity/culture 

Economic 

Social 

Environmental 

All areas 

to 

activity 

The  long-term  economic  cost  of  wars  can 
hardly be overestimated.  
Peace  and  stability  provide  an  environment 
favourable 
and 
economic 
economic growth.  
Deepened  cross-border  co-operation  may 
help  to  reduce  political  tensions  and  helps 
building mutual trust. 
The  prevention  of  conflicts  has  many 
positive social effects: saving lives, stopping 
migration  and  displacement,  preventing 
weaker  groups  being  victims  of  war  (e.g. 
children soldiers, rape of women). 
Political  cooperation  can  prevent  crime, 
insurgency and terrorism. 
Greater  civil  society  participation  allows  the 
population  to  both  identify  with  the  region, 
and shape its future 
Improved  stability  prevents  the  illicit  use  of 
natural  resources  as  a  source  of  revenue  for 
civil conflicts (e.g. “ war diamonds”) 
Deeper  co-operation  fuels  the  potential  for 
regional  organisations 
their 
capacity, allowing them to be more effective 
in all areas. 

increase 

to 

What does empirical evidence say? 

EN 

39 

   EN 

 
 
 
 
 
 
 
 
–  The probability of forming an FTA is 15 times higher in democracies than in autocracies, 
and for economic unions it is almost 50 times higher. Democratic leaders have a stronger 
incentive to join regional integration arrangements and to move towards deeper integration 
than  leaders  in  autocracies.  The  development  of  common  democratic  values  and 
institutions is in turn regarded as crucial for regional integration. 

–  There is a positive correlation between countries’ engagement on a multilateral level and 

regional cooperation. 

–  Civil war reduced GDP growth by 2.2% on average – often leading to negative growth in 

African countries with low pre-conflict growth rates.  

–  While only a small percentage of spending on regional peacekeeping missions ends up in 

the local economy, the amount is enough to boost very low income countries. 

4.4.2.  The contribution of different approaches to EU policy objectives 

The respective contribution of the three approaches to the four main policy objectives (growth 
generation,  sustainability,  regional  governance  and  political  dialogue)  is  very  uneven  as 
highlighted in Table 6 below: Approach 1 contributes most to growth generation; Approach 2 
is most beneficial for sustainability; and Approach 3 has a potentially strong contribution to 
improved governance and political dialogue.  

Table 10: The respective contribution of the three approaches to the EU policy objectives  

Growth 
generation 

Sustainability 

Regional 
governance  

Political dialogue 

Elimination 
of barriers to 
trade 

+++ 

-- 

Policy 
ordination 
and 
operation  

co-

co-

Political  co-
operation 

More specifically: 

+ 

+++ 

n.a. 

+ 

++ 

+ 

++ 

+ 

++ 

+++ 

–  Elimination  of  barriers  to  trade  has  a  very  strong  potential  for  supporting  growth 
since it focuses on the abolition of the (many) existing barriers to business and therefore 
allows  countries  to  reach  a  higher  growth  potential.  It  is  also  expected  to  help  regions 
deliver  on  their  own  agendas  of  improved  economic  governance  at  regional  level,  thus 
directly contributing to improved regional governance. However, it contributes rather 
negatively  to  the  objective  of  reinforcing  sustainability  as  it  does  not  address  the 
externalities produced by enhanced growth and increased economic integration. There may 
also be some drawbacks in the area of governance, as it may also highlight the conflicts 
and  overlaps  between  existing  regional  agendas.  This  is  also  why  its  contribution  to  a 

EN 

40 

   EN 

 
 
strengthened  political  dialogue  within  the  ACP  regions  and  between  the  EU  and  ACP 
regions will vary: it may foster the realisation among ACP countries that a rationalisation 
exercise  is  much  needed;  it  may  also  spur  the  competition  between  various  regional 
organisations  and  bring  the  EU  into  debates  that  need  to  be  settled  by  the  regions 
themselves.  

–  Policy co-ordination and co-operation for sustainable development will contribute to 
growth  generation through better common rules  for  business development and common 
policies  that  remove  the  obstacles  to  physical  integration  (energy,  transports).  However, 
the  main  contribution  of  this  option  lies  in  the  strongly  improved  sustainability  of 
outcomes  of  increased  regional  integration.  By  making  economic  integration  more 
environmentally  and  socially  sustainable,  it  allows  its  benefits  to  be  maximised  over  the 
long term, thus making regional integration more desirable for citizens and more politically 
sustainable. Its benefits for the efficiency of regional governance are more contrasted: on 
the one hand, there is the risk that new regional organisations will be created to deal with 
new policy areas, thereby increasing the institutional complexity ; on the other hand, policy 
coordination  in  a  wider  range  of  policy  areas  –  ranging  from  environmental  policy  to 
cohesion policy – will foster policy dialogue within the region, and allow such dialogue to 
be developed also with the EU, which has a strong experience and expertise and where a 
strengthened dialogue on policies could prove mutually beneficial.  

–  Political  co-operation,  by  contributing  to  political  stability  will  contribute  to  improved 
economic conditions and to make the benefits of approaches 1 and 2 more sustainable. Its 
contribution  to  growth  and  sustainability  could  therefore  be  very  large  in  theory.  In 
practice,  there  are  likely  to  be  more  limited  since  EU  support  is  just  one  element  in  a 
highly  complex  political  environment.  In  many  other  cases,  EU  instruments  may  be 
insufficient  or  inadequate  to  avert  a  crisis.  Approach  3  has  a  strong  potential  for 
reinforcing the efficiency of regional governance. Indeed, improved governance is at its 
core,  although  essentially  at  national  level.  In  practice,  the  regional  dimension  should 
probably be upgraded in the assessment of national good governance in order to reinforce 
the  contribution  of  the  national  level  to  effective  regional  governance.  Moreover,  it  is 
unclear to what extent the EU can contribute to the streamlining of regional organisations. 
Supporting regional integration on key security, stability and governance issues could also 
strongly  contribute  to  a  deeper  and  broader  political  dialogue  between  the  EU  and 
ACP countries, by putting this agenda at the heart of the region-to-region relationship and 
not limiting it to the national level as is currently the case. 

The  three  approaches  have  been  considered  in isolation  for  analytical  purposes.  In  practice, 
however,  they  are  not  mutually  exclusive  "options".  Indeed,  they  can  and  should  be 
combined, so that the benefits of the various approaches are added while the benefits of one 
approach are allowed to offset the drawbacks of the other.  

4.4.3.  Finding the right mix 

The  above  analysis  highlights  that  a  "mix  of  approaches”  may  actually  deliver  on  the 
expected benefits. This will also crucially depend on the specific situation of each region in 
terms of regional integration and of the main features of past and current EU intervention in 
this region.  

EN 

41 

   EN 

 
Some  conclusions  can,  however,  be  drawn  from  the  analysis  above.  First,  given  the  strong 
expected  benefits  in  terms  of  growth,  which  is  a  condition  for  development  and  poverty 
reduction  to  take  place,  continuing  to  focus  EU  support  to  regional  integration  on  the 
elimination of barriers to trade appears essential.  

Second, the analysis also clearly demonstrates that this focus needs to be complemented by a 
strengthened support to the two other approaches for:  

–  The  benefits  of  increased  trade  integration  to  be  maximised:  infrastructure  is  a  case  in 
point: even if the political, legal and administrative conditions for regional free trade are in 
place, intra-regional trade will not take off if the physical infrastructure has not kept pace; 

–  The drawbacks of trade integration to be minimised: the environment is the most obvious 
example.  Supporting  enhanced  regional  economic  integration  may  have  detrimental 
environmental consequences if a common regional policy for the sustainable management 
of resources is no simultaneously supported; 

–  And  regional  integration  to  be  economically,  socially,  environmentally  and  politically 

sustainable.  

5. 

EDF SUPPORT TO REGIONAL INTEGRATION: A MIX OF APPROACHES  

Overall, over  the period 1996 to  2007 covering the 8th and the 9the European Development 
Fund  (EDF),  a  total  of  €3.2  billion  has  been  s upporting  projects  with  a  regional  focus  (see 
Annex  4).  The  main  area  for  support  has  been  sustainable  development  with  €1.2  billion, 
followed  by  infrastructure  development  (€777  million)  and  business  development  (€524 
million). These three areas can be considered as falling under approach 2 as presented above, 
while  support  to  regional  integrated  markets  (corresponding  to  approach  1)  received  €501 
million. 

5.1. 

The 9th EDF regional programmes 

Unsurprisingly given the diversity of regional situations and the multiplicity of policy tools, 
current regional intervention is a mix of the three conceptual approaches outlined above. 

Within the realm of the elimination of barriers to trade, the current intervention contains a 
strong focus on economic integration.  

Although  the  emphasis  differs  from  one  region  to  the  other,  approach  1,  as  evidenced  in 
Annex  5,  Part  2,  has  been  the  overall  main  focus  of  9th  EDF  RIPs.  Economic  and  trade 
integration  is  a  focal  sector  in  all  regions,  with  a  foreseen  share  of  regional  expenditure 
ranging  from  25-30%  in  Central  Africa  to  as  high  as  75-90%  in  the  Caribbean.  Regional 
assistance  under  approach  1  encompasses  in  particular  the  strengthening  of  regional 
organisations  for  the  formulation  and  implementation  of  regional  economic  integration 
commitments.  Capacity-building  for  EPA  negotiations  is  mentioned  in  all  regional 
programmes and is an important part of this approach, as it concerns the external dimension 
of regional integration.  

Intervention  also  includes  all-ACP  instruments,  such  as  the  Trade.com  Facility  Programme 
(€50 million under the 9 th EDF). The specific objective of this programme is to improve the 

EN 

42 

   EN 

 
capacity of ACP countries and regional organisations to design and implement their own trade 
strategies  and  effectively  participate  in  international  (multilateral  or  bilateral)  trade 
negotiations. 

There is also considerable activity in the field of policy co-ordination and co-operation for 
sustainable development, although the regional focus varies.  

With regard to business development, the focus is on 5 areas with accompanying tools. These 
are:  (1)  the  macro-economic  /  regulatory  environment  (BIZ-CLIM),  (2)  investment  and 
business  partnership  (PRO-INVEST),  (3)  Financial  market  development  (EIB),  (4)  non-
financial services for SMEs (CDE, PRO-INVEST), and (5) Micro business and micro finance 
(CGAP). However, assistance at regional level is low, with efforts scattered over a number of 
programmes in different areas, with differing implementation and hence varying effects (see 
also Annex 5) 

Support of infrastructure has had a limited regional dimension, although this is the main area 
of  intervention  of  the  9th  EDF  country  programmes.  This  support  concentrates  on  co-
ordination and harmonisation rather than a fully blown infrastructure development plan, and 
the current transport intervention strategy has been considered as ineffective at regional level 
(see also Annex 5). In Africa, the EU-Africa Infrastructure Partnership, launched in 2007 and 
accompanied  by  a  new  Trust  Fund  funded  by  the  EC,  the  EIB  and  several  Member  States, 
aims  at  strengthening  EU  support  to  infrastructure  networks  of  a  continental  and  regional 
dimension and is specifically designed to support the African Union – NEPAD Infrastructure 
Plan.  It  provides  a  framework  for  better  interconnecting  countries  to  countries,  regions  to 
regions  and  Africa  to  the  rest  of  the  world,  thus  considerably  boosting  the  attention  to  the 
regional dimension of infrastructure development. 

Further  areas  of  intervention  vary  between  different  ACP  regions,  but  tend  to  be  the 
development  of  plans  and  regional  capacities  for  the  sustainable  management  of  natural 
resources. Concerning the 9th EDF RIPs, this is in particular the case in ESA, where natural 
resources  take  up  15  to  25%  of  the  regional,  in  Central  Africa,  where  the  sustainable 
management of natural resources is the second focal sector with 20 to 25% of the budget and 
in the Pacific, where fisheries is the third focal sector, with 17% of the budget.  

Current  intervention  in  the  domain  of  political  co-operation  is  essentially  limited  to  the 
streamlining of regional organisations, efforts to develop good governance and the support to 
regional stabilisation mechanisms.  

The EU approaches governance in a comprehensive way, with an emphasis on the ability of 
states  to  deal  with  their  core  functions  and  to  deliver  to  citizens  in  an  efficient,  responsive, 
accountable  and  transparent  way.  Supporting  political  will  for  reform  and  stimulating 
country-owned governance reforms through dialogue and incentives has been a central feature 
of ACP-EC cooperation, with the recent "Governance Incentive Tranche" under the 10th EDF. 
In a number of cases, partner governments have considered regional integration as a priority 
for reform and have therefore committed to specific reforms in this area. These reforms will 
be  monitored  through  permanent  political  dialogue  with  partner  countries  and  the  periodic 
reviews foreseen in the Cotonou Agreement. 

The African Peace Facility (APF - €440 million) was created under the EDF to provide the 
African Union and other African regional organisations with the resources to mount effective 

EN 

43 

   EN 

 
peace-making  and  peacekeeping  operations.  It  is  the  EU’s  way  of  backing  the  emerging 
African resolve to deal with conflicts on the continent with African solutions. The APF has 
funded four African peace operations: the AU Mission in Sudan (AMIS, nearly €300 million); 
the AU Mission in Somalia, AMISOM (€15 m illion); the FOMUC mission in the CAR (€23,4 
million) and the AU Mission in Comoros (AMISEC, €5 million). The APF has also backed 
capacity-building  activities  at  the  regional  and  sub-regional  level  in  the  areas  of  conflict 
prevention and crisis management (around €35 million in total). 

The  Instrument  for  Stability  (IfS)  consists  of  a  crisis  response  component  (€100  million  in 
2007) and a longer-term component (€40 million in  2007) addressing proliferation and trans-
regional  threat.  Thematically,  the  measures  supported  so  far  cover  a  broad  range  of  issues, 
depending  on  the  specific  needs  of  each  conflict  /  post-conflict  situation.  A  number  of 
programmes  currently  underway  support  regional  peace-building  capacity,  for  instance  the 
AU  operation  AMISOM  in  Somalia  (€5  million)  and  the  AU-UN  mediation  in  Darfur  (€  3 
million).  

The above includes the assessment received from independent evaluations. Such independent 
evaluation  also  highlighted  a  number  of  weaknesses  in  the  broader  regional  intervention 
strategy used for the 8th and 9th EDF (Annex 5): 

–  The  Commission  faces  a  "choice  of  partner"  dilemma,  i.e.  with  which  regional 
organisation  to  work.  This  is  closely  linked  to  capacity  constraints  in  implementing 
regional policy due to weak institutions.  

–  While the Commission is contributing to regional level governance objectives, the overall 

effect of this intervention on sustainability is not always clear.  

–  The  participation  of  non-state  actors  at  regional  level  is  missing  from  current  regional 
interventions, though this is complicated by the fact that most non-state actors think on a 
local or national level, rather than on a regional level. 

–  Efforts towards economic integration are considered as not tackling poverty satisfactorily 

at regional level.  

–  The  articulation  /  mutual  reinforcing  between  the  national  programmes  and  the 

regional programmes can be improved. 

–  More focus should be placed on effective local and regional capacity-building. 

5.2. 

The 10th EDF regional programmes16 

The 10th EDF regional programmes are the primary instrument of EC support to ACP regional 
integration.  While  the  overall  EDF  substantially  increased  from  the  9th  to  the  10th  EDF,  the 
regional  envelope  almost  doubled  to  €1.78  b illion,  reflecting  EU-ACP  consensus  on  the 
importance of regional integration for development.  

16 

See Commission Staff Working Paper SEC(2008)2538 of 01.10.2008 for more details on the Regional 
Strategy Papers and the content of the Regional Indicative Programmes. 

EN 

44 

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The  new  RIPs  will  respond  to  the  identified  challenges  and  provide  a  mix  of  the  three 
approaches outlined above. They will:  

–  Provide,  in  all  regions,  support  for  regional  mechanisms  to  foster  peace  and  stability, 
prevent  and  manage  conflicts,  and  fight  security  threats  (such  as  organised  crime),  thus 
furthering a broadly-defined regional human security agenda. In West, Southern and East 
Africa, EDF support will help strengthen the regional pillar of the pan-African architecture 
of peace and security. 

–  Pay  particular  attention  to  regional  economic  integration,  with  almost  75%  of  the 

indicative appropriation (i.e. €1.3 billion) likely to be  devoted to this area. 

–  Within  the  regional  economic  integration  agenda,  focus  on  specific  regional  priorities, 
with  an  emphasis  on  the  completion  of  more  integrated  markets;  the  development  of 
productive  capacities;  and  the  improvement  of  infrastructure  networks  and  enhanced 
regional  cooperation  for  the  promotion  of  sustainable  energy  policies.  There  will  be  a 
particular  focus  on  EPA  support  measures:  almost  half  of  the  Caribbean  RIP  would  be 
allocated to their EPA commitments. 

–  Reflect  the  diversity  of  ACP  regions  in  terms  of  their  priorities  for  sustainable 
development. This applies, in particular, to the second focal sector in the Pacific (fisheries) 
and  in  Central  Africa  (forestry).  Support  for  food  security  and  agriculture  is  foreseen  in 
West Africa, and for land, water and marine resources management in East Africa. 

–  Support  good  regional  governance,  with  an  emphasis  on  capacity-building  for  non-state 

actors.  

5.3. 

Exploiting the synergies for inter-regional cooperation  

Regional  integration  projects  should  not  be  developed  in  isolation  from  their  immediate 
environment.  In  designing  their  strategies,  ACP  regions  should  be  invited  to  reflect  on  the 
potential  for  increased  cooperation  with  neighbouring  regions/partners,  that  the  EU  could 
support. This particularly concerns: 

–  Cooperation across ACP regions: this applies to Africa and the fact that economic, social, 
environmental or political ties do not stop at the borders of a particular country grouping: 
desertification should, for instance, be tackled across the Sahel region, not within regional 
boundaries. There is therefore a need to take into account and eventually favour initiatives 
that will address challenges that are common to two regional groupings, or will facilitate 
cross-border cooperation. This will require well identified needs, and well coordinated and 
sequenced  support,  but  in  many  cases  will  be  more  efficient  than  two  separate  sets  of 
intervention.  

–  ACP – EU Outermost regions collaboration: the EU is a long standing supporter of inter-
regional cooperation, not the least through the support of its regional and structural funds. 
The Commission Communication "Strategy for the Outermost Regions: Achievements and 
Future Prospects" of 12 September 200717 calls on the ACP, the outermost regions and the 

17 

Commission  Communication  on  a  Strategy  for  the  Outermost  Regions:  Achievements  and  Future 
Prospects, COM(2007)507 final, 12.09.2007 

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45 

   EN 

 
                                                 
the  specific  possibilities  and 
Oversees  Countries  and  Territories 
practicalities  of  a  concerted  EDF  and  ERDF  programming  with  parallel  co-financing 
arrangements, with a view to cooperation schemes at national and regional level".  

to  "implement 

–  Territorial cooperation programmes, funded under the former INTERREG initiative, have 
been  set  in  all  outermost  regions  to  support  cooperation  with  ACP  and  OCTs  in  the 
Caribbean,  Indian  Ocean  and  West  Africa.  These  programmes  include  committees 
entrusted  with  the  collaboration  between  EDF  and  ERDF  managers  in  order  to  better 
coordinate financial programming and facilitate parallel financing of common projects. 

–  New  links  between  ACP  –  EU  Oversees  Countries  and  Territories  (OCTs):  The 
Commission's Communications on a renewed  partnership with the Caribbean  and Pacific 
emphasised  the  added  value  of  new  synergies  between  these  ACP  regions  and  other 
partners of the same region. With regard to OCTs, the Commission's Green Paper on the 
future EU-OCT relations invited the OCTs and their Member States to examine how, in the 
context of increased regional integration that is taking place in the different regions where 
OCTs are located, OCTs could increase their trading relationship with neighbouring (ACP) 
countries,  while  ACPs  regions  could  be  invited  to  accept  that  an  OCT  participates  in 
regional integration if that OCT and its Member State so request. Another area of increased 
synergies is the sharing their "European" know-how and knowledge in a number of areas 
of interest of neighbouring (developing) countries.  

5.4. 

Design of regional integration and EU support 

Whichever the approach for EU support as described above, a key parameter to be examined 
is  the  design  of  regional  integration,  i.e.  the  model  followed,  its  architecture  and  its 
governance structures. Amongst the various issues are:  

–  Intergovernmentalism  vs.  supranationalism:  the  EU  does  not  interfere  with  the  choices 
made by its partners on whether their cooperation entails maintaining the full exercise of 
national sovereignty or sharing (some specific aspects of) sovereignty. It is clear, however, 
that  the  effectiveness  of  a  number  of  policies  is  predicated  on  the  acceptance  that 
sovereignty is to be shared – i.e. that the decisions taken collectively are to be loyally and 
effectively applied by all regional partners. An important realisation in this respect is that, 
in a globalised world, pooling sovereignty is increasingly the only way to actually exercise 
this sovereignty. 

–  Configuration, full inclusiveness or variable geometry: the EU supports the choices made 
by partners, who should decide on regional configurations, the modalities of political and 
economic  integration  and  whether  some  countries  in  a  region  may  progress  towards 
(shared)  objectives  and  more  far-reaching  commitments  quicker  than  others.  In  so  far  as 
this may have implications for the achievement of development goals and the effectiveness 
of the relations with the EU (e.g. financial or trade cooperation), the EU should be ready to 
share  expertise  and  advice  on  how  best  to  address  diversity  within  a  region  while 
encouraging deep and, over time, fully inclusive integration.  

–  Whichever  approach  is  chosen,  the  number  and  relationships  between  various  regional 
organisations  should  be  manageable  and  clear,  and  institutions  should  have  realistic  and 
contradiction-free  mandates as well as adequate (human  and financial) resources to fulfil 

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these. As these aspects are of direct relevance for the effectiveness of EU support, the EU 
has an interest in sharing expertise with ACP partners on these issues. 

–  Subsidiarity is a key guiding concept. Not only is it in ACP partners' interest to deal with 
issues as close as possible to the population concerned and at the level that will maximise 
the  efficiency  of  the  activity,  but  it  is  of  direct  application  also  for  EU  interventions, 
especially  when  they  include  financial  support  and  a  decision  whether  to  intervene  at 
country, regional, continental or all-ACP level. 

The design of regional integration as chosen by ACP partners is bound to have an impact, in 
particular, on the design of EU policies toward regional integration in ACP countries and, in 
particular, on the following aspects:  

–  Articulation between the national and regional levels of support: the type of intervention 
and  the  desirable  balance  between  regional  and  national  support  are  affected  by  the 
integration model chosen by a region for a particular policy. In any case, the national level 
is essential for the effective implementation of regional commitments. This may not have 
been sufficiently taken into account in past interventions. 

–  Global  EU  approach:  Given  that  the  EU  (the  European  Community  and  its  Member 
States)  is  collectively  and  by  far  the  largest  donor  of  development  assistance,  uniting  all 
EU  Member  States  behind  a  common  concept  can  make  the  difference  in  enhancing  the 
the 
EU-ACP  partnership  on  regional 
effectiveness  of  EU  financial support  for regional integration.  An  EU  concept  of  support 
for  regional  integration  will  help  support  regional  priorities,  avoid  inconsistencies  in  the 
institutions  /  projects  funded,  allow  a  critical  mass  to  be  reached  and  efficiency  and 
effectiveness to be increased. 

integration  and  specifically 

improving 

in 

–  Strategic  approach:  a  more  strategic  approach  could  enhance  the  effectiveness  of  EU 
support.  This  would,  for  instance,  imply  that  regional  considerations  –  positive  and 
negative  externalities  for  regional  integration,  leverage  effect  in  boosting  further 
cooperation and integration – become more important factors in the selection of projects, 
both at regional and national level.  

5.5. 

Risk factors  

There are many risks and uncertainties. Political instability, at national or regional level, is 
clearly  the  single  largest  risk  for  regional  integration.  Indeed,  it  can  easily  wreck  regional 
integration as the benefits of integration will turn into drawbacks. This was demonstrated in 
recent  years  in  Ivory  Coast,  where  instability  has  had  important  consequences  on 
neighbouring  countries  that  were  economically  very  much  linked  to  Ivory  Coast,  such  as 
Burkina  Faso.  This  is  why  the  importance  of  approach  3  increases  with  the  degree  of 
integration  reached:  in  addition  to  its  direct  benefits,  it  also  helps  reaping  /  preserving  the 
expected benefits of approaches 1 and 2.  

Policy failure is another risk. Although this is inherent to any policy action, the potential for 
policy  failure  may  be  larger  for  action  at  regional  level,  especially  if  and  when  governance 
and  implementation  capacities  are  low.  Even  where  the  value  added  of  acting  jointly  at 
regional level is well-established and where the policy itself is well-designed, its impact may 
be less positive than the sum of national actions. If countries are insufficiently committed to 
the common tackling of diseases, this can lead to a worse situation than if countries were to 

EN 

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tackle diseases alone. This is why implementation capacities, both at regional and at national 
level, are essential.  

EN 

48 

   EN 

 
EN 

49 

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ANNEX 1: OVERVIEW OF REGIONAL INTEGRATION IN ACP REGIONS 

1. 

Caribbean 

Regional  Integration  in  the  Caribbean  is  mainly  through  the  Caribbean  Community,  or 
CARICOM18 as it is more widely known. CARICOM was established in 1973 by the Treaty 
of  Chaguaramas  which  was  revised  in  2001.  CARICOM's  three  main  objectives  are: 
economic co-operation, co-ordination of foreign policy and functional cooperation including 
health, education, youth, sports, science and tax administration. The Caribbean Single Market 
and  Economy  (CSME)  contributes  to  deepening  the  integration  process,  based  on  both 
market  and  economic  integration.  To  support  this  process,  the  Treaty  of  Chaguaramas  was 
revised  and  now  contains  nine  chapters  covering  the  major  areas  of  the  CSME.  When 
completed, the CSME will provide for the free movement of goods, services, capital, labour 
and  right  of  establishment  within  the  Community  and  harmonised  laws  and  regulations 
affecting  commerce.  The  Single  Market  component  of  the  CSME  was  introduced  by 
Barbados, Belize, Guyana, Jamaica, Suriname and Trinidad & Tobago in January 2006. The 
OECS countries (Antigua & Barbuda, Dominica, Grenada, St. Kitts & Nevis, St. Lucia and 
St. Vincent & the Grenadines) signed up to the CSME in July 2006. A Regional Development 
Fund to assist  in mitigating  negative  impacts of  OECS participation in the CSME  was also 
agreed.  

The  CARICOM  trade  policy  is  to  remove  remaining  internal  barriers  through  progressive 
movement  towards  a  maximum  harmonized  tariff,  further  harmonization  of  customs 
procedures and establishment of a customs union. A Common External Tariff (CET) has been 
introduced. Quotas remain as well as allowed tariffs on some agricultural and other products, 
which  will  have  to  be  removed  by  the  end  of  2008.  A  corresponding  policy  of  legal, 
institutional and judicial reform is intended to create an appropriate enabling environment for 
these moves. The Caribbean Court of Justice (CCJ) was established in 2006. 

The  Caribbean  States  that  make  up  the  Organization  of  the  Eastern  Caribbean  States 
(OECS)19 (all of whom are members of CARICOM) constitute in some ways an inner circle 
of Caribbean economic/monetary integration, and have, since the colonial era, a long tradition 
of  cooperation.  In  more  recent  times,  the  nature  of  the  cooperation  has  taken  on  a  more 
functional  and  development-oriented  character.  OECS'  main  objective 
is  economic 
integration  among  its  member  states,  and  they  have  a  single  currency  and  an  Eastern 
Caribbean  Central  Bank,  exercise  common  monetary  and  exchange  rate  policies,  share  a 
common Supreme Court, jointly regulate the telecommunications sector, cooperate on some 
issues of public procurement and collectively govern their airspace. In the medium-term, they 
intend  to  further  this  functional  and  economic  integration.  The  organisation  has  begun 
technical  work  with  respect  to  creating  regional  support  systems  and  mechanisms  for  the 
police  and  prison  services,  creating  centres  of  medical  and  surgical  specialization  across 

18 

19 

The CARICOM Member States are: Antigua/Barbuda, Bahamas, Belize, Dominica, Grenada, Guyana, 
Haiti,  Jamaica,  Montserrat,  St.  Kitts/Nevis,  Saint  Lucia,  St.  Vincent/the  Grenadines,  Suriname  and 
Trinidad/Tobago.  CARICOM’s  Associated  Members  are:  Anguilla  (1998) ;  Bermuda  (2003);  British 
Virgin Islands (1991); Cayman Islands (2002); Turks and Caicos Islands (1991 
Antigua and Barbuda, Dominica, Grenada, Montserrat, St Kitts and Nevis, St Lucia and St Vincent and 
the Grenadines. Anguilla and the BVI are associate members. 

EN 

50 

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Member  States  and  establishing  an  Economic  Union,  with  free  movement  of  productive 
factors.  

The  next  circle  is  the  Caribbean  Forum  of  ACP  States,  also  known  as  CARIFORUM20, 
which  was  created  in  1992  by  inter-governmental  agreement,  as  a  political  group  including 
not only the CARICOM Member States, but also what were then the new signatories to the 
Lomé Convention, namely, the Dominican Republic, Haiti and Suriname although the latter 
two have since acceded to CARICOM. Cuba is also now a member state of CARIFORUM, 
although it is not a signatory to the Cotonou Agreement. The CARIFORUM mandate is to 
manage and coordinate policy dialogue between the Caribbean region and the EU, to promote 
integration and cooperation in the Caribbean and to coordinate the allocation of resources and 
manage  the  implementation  of  Regional  Indicative  Programmes  financed  by  the  European 
Development Fund and regional programmes financed by member states of the EU and any 
other source. The EU-Caribbean Economic Partnership Agreement (EPA) was concluded on a 
CARIFORUM wide basis. 

Hemispheric  relations  are  important  to  CARICOM/CARIFORUM,  as  part  of  its  global 
integration  objectives.  In  that  regard,  the  region  is  committed  to  effective  participation  in 
hemispheric  and/or  bi-lateral  processes.  The  hemispheric  strategies  include  strong  technical 
and  political  representation,  securing  special  and  differential  treatment  and  transitional 
measures,  design  and  implementation  of  measures  to  cushion  the  impact  of  adjustments, 
monitoring of parallel negotiations and consistency with other multi-lateral negotiations. 

All Caribbean countries are also part of the Association of Caribbean States (ACS). 

20 

CARIFORUM includes all the Caribbean ACP States, namely all the CARICOM Member States except 
Montserrat (which is an OCT) plus the Dominican Republic and Cuba. 

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51 

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Caribbean Regional Economic Communities

CARIFORUM: Caribbean Forum
CARICOM: Caribbean Community
15 members (shown) plus 5 associate members; Anguilla, Bermuda, 
British Virgin Islands, Cayman Islands, Turks & Caicos. 
OECS: Organization of Eastern Caribbean States

OECS

British Virgin Islands

Anguilla

CARICOM

Montserrat

CARIFORUM

Bahamas

Cuba

Dominican
Republic

Haiti

St Kitts & Nevis

Jamaica

Belize

Barbados

Antigua & Barbuda

Dominica

St Lucia

Grenada

St Vincent 
& Grenadines

Trinidad and Tobago

Guyana

Suriname

EN 

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EN 

 
  
2. 

Central Africa 

The  landscape  of  regional  integration  in  the  Central  African  region  consists  of  three, 
overlapping,  regional groupings: the Economic and Monetary Community of Central Africa 
(CEMAC);  the  Economic  Communities  of  Central  African  States  (ECCAS);  and  the 
Economic Community of the Great Lakes Countries (ECGLC).  

The Economic and Monetary Community of Central Africa (CEMAC21) replaced the Union 
Douanière et Économique de l'Afrique Centrale (UDEAC) in 1994. The main objective of the 
Community is to reinforce the process of regional integration in support of development. The 
monetary union built around the CFA Franc, which was originally pegged to the French franc 
and is pegged to the euro since 1999, worked well during the thirty years of cooperation under 
the  UDEAC,  but  this  union  remained  largely  disconnected  from  regional  economic 
cooperation on non-monetary issues. 

Four institutions were created in 1994: the Economic Union of Central Africa; the Monetary 
Union of Central Africa; the Parliament of the Community; and the Court of Justice.  

The CEMAC Treaty foresaw a three step integration process for the economic union: 1999-
2004, 2005-2009 and 2010-2014. The main objectives of this process are the establishment of 
a common market for the free movement of goods, services, capital and persons (this includes 
a  customs  union)  the  elaboration  of  community  legislation  in  the  area  of  economics  and 
finance  and  provides  the  impetus  for  macro-economic  convergence  between  member  states; 
the  coordination  of  national  policies  through  joint  action  (by  sector:  agriculture,  animal 
husbandry, 
and 
telecommunications),  the  coordination  of  trade  relations  with  other  regions,  and  community 
action on horizontal issues such as education and research. 

environment, 

transports 

fisheries, 

tourism, 

energy, 

trade, 

There is, however, an important gap between the existing body of legislation, which is quite 
comprehensive, and the state of implementation of Community decisions. In several areas, the 
current  results  are  still  very  far  from  achieving  the  objectives.  For  example,  despite  the 
agreement  on  the  free  movement  of  CEMAC  citizens,  a  number  of  countries  in  the  region 
continue to require an entry visa for CEMAC citizens. However, the Community as a whole 
does not have a system of sanctions with which to address the non application by its member 
states of community legislation. 

Currently the Community is in the middle of a reform process launched in 2005 to improve 
the  efficiency  of  the  community  institutions.  In  particular  the  reform  will  create  an 
independent Commission which will be in a better position to animate the regional integration 
process. 

The  second  organization  in  the  region,  the  Economic  Community  of  Central  African  States 
(ECCAS)  is  made  up  of  the  same  CEMAC  six  countries  plus  the  Democratic  Republic  of 
Congo  (DRC),  São  Tomé  e  Principe,  Angola  and  Burundi  (Rwanda  left  the  organization 
during 2007). Given the weight of DRC, the demographic, political and economic importance 
of the region covered by this organization is significant. 

21 

Cameroon, Central African Republic, Republic of Congo, Equatorial Guinea, Gabon, Chad 

EN 

53 

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The integration process has been slowed down by the number of conflicts that many countries 
have  faced.  During  the  late  1990s,  seven  of  the  eleven  countries  were  in  such  a  situation, 
which led to a crisis in the organisation,  which only restarted  its activities at the end of the 
1990s, notably in the area of conflict prevention. 

ECCAS  has  adopted  a  trade  liberalization  scheme;  the  free  trade  area  has  been  launched  in 
2004 and is slowly implemented.  

The  Economic  Community  of  the  Great  Lakes  Countries  (ECGLC-CEPGL),  created  in 
1976,  consists  of  the  DRC,  Rwanda  and  Burundi.  After  many  years  of  paralysis,  the 
organization has been officially re-launched in 2007 in the hope of restoring trust between the 
three  countries.  The  main  objectives  of  CEPGL  are  to  promote  security  and  economic 
development  through  developing  economic  activities  of  common  interests  in  the  energy, 
environmental and rural development sectors. 

3. 

East and Southern Africa 

Regional integration in the East and Southern African region is a complex picture. There are 
four  main  Regional  Integration  Organisations,  with  significant  overlap  between  them.  The 
regional economic integration process in the ESA region was first institutionalised in the late 
seventies and evolved into the formation of the four organisations that were given mandates to 
address  specific 
issues  but  ultimately  with  common  development  objectives.  The 
organisations concerned are COMESA, EAC, IGAD and IOC.  

The Common Market for Eastern and Southern Africa (COMESA22) was created in 1994 by 
the treaty of Lilongwe, with an objective of promoting regional economic integration within 
the  region,  by  developing  trade  and  investment.  COMESA  launched  its  Free  Trade  Area  in 
2000,  currently  with  currently  with  thirteen  members,  and  is  preparing  to  establish  its 
Customs Union in 2020. COMESA has programmes in trade and transport facilitation, trade 
in  services,  free  movement  of  persons  and  investment.  Cross-cutting  areas  and  other  issues 
include  gender  policy,  conflict  prevention  and  a  COMESA  Court  of  Justice.  The  General 
Secretariat  is  the  main  institution  and  has  a  technical  and  consultative  role  on  the  Treaty's 
application, whose interpretation is subject to the ruling of the Court of Justice. 

Since  October  2000,  tariffs  have  been  abandoned  between  several  ESA  States23.  This  free 
trade  area  is  the  greatest  success  of  the  region  and  trade  has  increased  rapidly  between  the 
member countries (+30% the two first years) as a result. Of the 19 ESA countries, there are 
currently 13 of them in the Free Trade Area, with others committed to joining at specified and 
times. Since then a medium term Strategic Plan for 2007-2010 has been adopted by the Heads 
of State and Government in December 2006. In terms of regulatory and policy framework, the 
major  challenges  to  be  addressed  by  COMESA  in  establishing  a  Common  Market  are  the 
setting up of a COMESA Common Investment Area and the application of the principle of the 
Free  Movement  of  People  while  at  the  same  time  ensuring  that  all  those  measures  actually 
benefit all the stakeholders, and ultimately contribute to poverty eradication in the region. To 
this  end  COMESA  Mid  Term  Strategic  Plan  encompasses  private  sector  development, 
investment promotion and infrastructure development among other things.  

22 

23 

Angola, Burundi, Comoros, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, 
Madagascar, Malawi, Maurice, Uganda, Rwanda, Seychelles, Sudan, Swaziland, Zimbabwe, Zambia. 
Djibouti, Egypt, Kenya, Madagascar, Malawi, Maurice, Sudan Zambia, Zimbabwe 

EN 

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The  Eastern  African  Community  (EAC24)  has  undergone  a  rapid  process  of  both  widening 
and deepening since its rebirth in 1999. EAC now has five member states. This membership 
obliges  EAC  countries  to  maintain  close  and  productive  relationships  with  other  regional 
organizations  to  whom  its  members  also  belong  while  aiming  for  rationalisation  of 
membership where needed – the principal partners in this respect are COMESA, IGAD and 
SADC. Like COMESA, EAC pursues a regional integration agenda and also plays an active 
part in the agenda of the African Union and its institutions. 

The  key  integration  milestone  in  EAC’s  recent  history  was  the  agreement  of  the  Customs 
Union  protocol,  which  came  into  force  in  2005.  The  principal  components  of  the  customs 
union  agreement  are  a  Common  External  Tariff  on  imports  from  third  countries,  duty-free 
trade between the EAC member states and common customs procedures. The agreed external 
tariff  follows  the  tariff-escalation  principle,  with  different  rates.  The  removal  of  duties  on 
trade  within  the  Customs  Union  has  the  effect  of  reducing  protection  against  competitors 
within  the  region,  particularly  creating  greater  openness  of  the  Tanzanian  and  Ugandan 
markets to imports from Kenya. Negotiations have now started to establish a common market 
in  EAC  by  2012,  and  to  evolve  to  a  monetary  union  according  to  a  similar  schedule.  In 
addition, discussions have been undertaken in the last three years on ‘fast tracking’ the final 
component of the integration continuum, political federation.  

The  recurrent  droughts,  during  the  1970s  and  1980s,  led  in  1986  to  the  creation  of  the 
Intergovernmental  Authority  on  Drought  and  Development  (IGADD)  by  the  General 
Assembly of the United Nations. Its objective was to fight against water shortages, and aimed 
in  the  long  term  at  improving  cooperation  between  the  member  States25.  However  its  role 
remained limited, due to a lack of financing and tensions between several countries. 

The  1996  Nairobi  summit  led  to  a  deep  reform  of  the  institution,  which  became  the 
Intergovernmental  Authority  for  Development  (IGAD).  The  main  objectives  of  the 
organization  are  to  work  at  a  regional  economic  integration,  meaning  a  wide  free  trade 
agreement; to reach and sustain food security; and to prevent conflicts within the region. 

The main achievements of recent years were focused on security issues, including mediation 
in  Sudanese  and  Somali  conflicts.  Four  projects  were  actually  developed:  an  ICT  project 
involving  EAC,  COMESA  and  IOC;  the  IGAD  livestock  policy  initiative;  a  programme 
concerning  the  development  and  economic  integration  of  women;  and  the  IGAD  climate 
prediction and application centre.  

The  Seychelles,  Madagascar  and  Mauritius  created  the  Indian  Ocean  Commission  (IOC)  in 
1984.  For  Réunion,  France  joined  them  in  1986,  and  now  contributes  40%  of  the 
organization's  budget.  The  constitutional  Agreement  of  Victoria  covers  a  wide  variety  of 
cooperation  areas  (diplomatic,  economic  and  commercial,  agricultural  and  fishing,  cultural, 
scientific, education and justice).  

Since  its  creation,  IOC  has  been  involved  in  projects  concerning  natural  resources  and 
environment  protection.  The  challenge  the  deepening  of  economic  integration  faces  is  the 
high  heterogeneity  in  the  levels  of  development  (2  LDCs,  2  Intermediate  Income  Countries 
and an island considered as developed). 

24 
25 

Burundi, Kenya, Tanzania, Uganda, Rwanda. 
Eritrea, Ethiopia, Djibouti, Kenya, Sudan, Somalia, Uganda. 

EN 

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Implementation  of  activities  in  the  ESA  region  is  through  the  Inter-Regional  Coordinating 
Committee  –  (IRCC),  which  was  established  to  ensure  better  coordination  in  the 
implementation  of  programmes  and  contribute  to  the  harmonization  of  policies  in  line  with 
the recommendations of the AU. Two delivery mechanisms are used to channel the funds to 
the  ESA  IO  region:  Contribution  Agreements  and  Financing  Agreements.  Regional 
mechanisms such as the COMESA Fund and other equivalent mechanisms under other RECs 
will be used as much as possible to channel funds.  

4. 

Southern Africa 

Southern Africa has two regional economic communities, the Southern African Development 
Community26  (SADC)  and  the  Southern  African  Customs  Union27  (SACU).  The  Southern 
Africa  region  is  composed  of  a  highly  diverse  set  of  countries  -in  terms  of  size,  level  of 
development and economic specialisation- and is marked by the  prominent weight of  South 
Africa. South Africa represents more than 70% of the region's GDP (2007), accounts for 60% 
of intra-SADC trade and is the first investor in the region. Since its democratization in 1994 
the country has exerted a growing influence in the region whilst at the same time seeking to 
operate in consensus with its neighbours. 

The  Southern  African  Development  Community  (SADC)  is  an  intergovernmental 
organization  that  was  founded  in  1992  on  the  basis  of  the  former  Southern  African 
Development  Co-Ordination  Conference  (SADCC).  The  SADC  integration  project  has 
evolved along two parallel tracks: a trade integration track (a market-driven economic project 
with an emphasis on trade and investment) and a development integration track (a politically-
driven process that deals with political and security issues). 

Most  positive  results  have  been  achieved  on  trade  integration.  The  SADC  FTA  came  into 
effect in January 2008. By the end of the year, 85% of all product lines should be trading with 
zero tariffs, whereas the remaining 15%, including sensitive products, will be duty-free by the 
end  of  2012.  SADC's  ambitions  for  deeper  integration  in  the  future  are  outlined  in  the 
Regional  Indicative  Strategic  Development  Plan  (RISP)  that  sees  the  FTA  as  a  first  step 
towards the establishment of a customs union in 2010 and a common market in 2015.  

The Southern African Customs Union (SACU) was created in 1910 and is considered the 
oldest  functional  customs  union  in  the  world.  The  founding  agreements  were  significantly 
revised in 2002 in order to deepen the engagement between South Africa and the four other 
member  States  and  set  up  a  more  democratic  and  ambitious  integration  project.  The  main 
features  of  the  revised  agreement  are  a  reform  of  SACU's  decision  making  bodies,  the 
adoption of common policies and strategies, and the support of more balanced development 
between member countries.  

The  biggest  changes  of  the  reform  affected  SACU's  governing  institutions,  particularly  the 
SACU  Council  of  Ministers  where  decisions  are  taken  by  consensus.  External  trade 
negotiations are also to be conducted by SACU as a single entity since 2002.  

26 

27 

Angola,  Botswana,  the  Democratic  Republic  of  Congo,  Lesotho,  Madagascar,  Malawi,  Mauritius, 
Mozambique, Namibia, South Africa, Swaziland, United Republic of Tanzania, Zambia and Zimbabwe. 
Botswana , Lesotho, Namibia, Swaziland and South Africa. 

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The  revenue-sharing  arrangement  is  another  central  feature  of  SACU.  The  new  formula 
consists  of  a  customs  component,  an  excise  component  and  a  development  component. 
Customs  revenues  are  distributed  according  to  each  country's  imports  but  the  compensation 
formula de facto entails a sizeable subsidy by South Africa to the other members, for whom 
these transfers represent between 30% and 60% of their public budgets. 

Future work for SACU includes moving towards completion of its internal market, including 
through the elimination of existing non-tariff barriers and tackling the implications of rules of 
origin agreements that some members have established with third countries. SACU's internal 
agenda  also  comprises 
like  fiscal 
harmonization, customs procedures or competition policy, although no dates have been set for 
these objectives. 

the  adoption  of  common  frameworks 

in  areas 

5.  Western Africa 

Western  Africa  is  probably  one  of  the  most  integrated  regions  within  the  ACP,  with  two 
organisations dominating the regional landscape: the Economic Community of West African 
States (ECOWAS) and the Economic and Monetary Union of West Africa (UEMOA). 

The Economic Community of West African States (ECOWAS), created in 1975, is made up 
of fifteen States28. According to its founding treaty, ECOWAS is the  overall framework for 
integration in Western Africa, with the UEMOA Treaty built into the objectives of ECOWAS. 
The  initial  objectives  of  the  Treaty  were  the  implementation  of  an  economic  and  monetary 
union, settling a regional market for the whole West Africa, complete with free movement of 
goods and people. 

Four  priorities  form  the  political  agenda  of  ECOWAS:  institutional  strengthening; 
establishment  of  a  common  market,  and  especially  the  creation  of  a  free  trade  area  and  a 
customs union; harmonization of economic and financial policies with a view to establishing 
a monetary union; and conflict prevention and political dialogue. 

From  an  institutional  point  of  view,  in  addition  to  the  creation  of  a  Court  of  Justice  and  a 
Parliament,  the  Secretariat  was  reorganised  and  transformed  into  a  Commission.  Its  powers 
were strengthened and its operational procedures improved. 

The ECOWAS treaty foresees the progressive establishment of this common market between 
the member States, including the free circulation of goods, services, capital and people. The 
Heads  of  States  Conference  decided  to  implement  the  Free  Trade  Area  by  2004  and  the 
customs  union  by  2007  but  these  decisions  have  not  been  fully  implemented  yet.  Free 
movement  of  people  is  regulated  by  a  1978  protocol.  Whereas  neither  visas  nor  residence 
permits are officially required anymore, controls and administrative procedures remain. 

ECOWAS  also  developed  several  sector  programs,  concerning  inter  alia  infrastructures, 
agricultural policy, energy, telecommunications, and private sector development, in order to 
create  the  common  market.  However,  ECOWAS  still  suffers  from  a  lack  of  human  and 
financial resources to effectively coordinate implementation. 

28 

Benin,  Burkina  Faso,  Cape  Verde,  Ivory  Coast,  Gambia,  Ghana,  Guinea  Conakry,  Guinea  Bissau, 
Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, Togo. Mauritania left the Community in 1999. 

EN 

57 

   EN 

 
                                                 
Harmonization  of  economic  and  financial  policies  constitutes  an  intermediate  objective 
towards a fully-fledged monetary union. In this context, the countries which are not members 
of  the  UEMOA  (except  Cape  Verde  and  Liberia)  decided  to  establish  a  second  monetary 
union,  which  is  then  supposed  to  join  the  UEMOA  zone,  thereby  creating  a  big  ECOWAS 
monetary union (the currency will be the ECO).  

In the political area, ECOWAS is developing a conflict prevention and management strategy, 
as well as a standby forces approach. Through its peacekeeping interventions and mediations 
initiatives  in  the  region,  ECOWAS  has  contributed  to  the  stabilisation  of  the  region  and 
gained credibility for conflict prevention. 

The  West  African  Economic  and  Monetary  Union  (UEMOA)  is  an  organisation  of  eight 
states29  established  in  1994  after  the  devaluation  of  the  Franc  CFA,  with  the  objective  of 
promoting economic integration among member countries of ECOWAS that share the same 
currency,  the  CFA  Franc.  UEMOA  is  a  customs  union,  and  a  monetary  union,  pegging  the 
CFA franc to the Euro, which has several objectives:  

–  Creating  a  common  market:  consolidating  the  customs  union  created  in  2000  and 

eliminating all non tariff barriers to the free movement of goods. 

–  Greater economic competitiveness, through open and competitive markets, along with the 
standardization,  and  harmonization  of  national  legislation  concerning  public  tenders, 
intellectual  property,  fiscal  policies,  and  consumers'  policies.  In  addition  much  progress 
has  also  been  done  in  order  to  harmonise  legislations  with  the  aim  of  ensuring  the  free 
circulation of persons, services and capital.  

–  The  convergence  of  macroeconomic  policies:  member  states  signed  in  1999  a 
Convergence  and  Stability  Pact,  which  aims  to  ensure  convergence  of  macroeconomic 
policies on the basis of a number of convergence criteria.  

–  The  coordination  of  sectoral  policies,  for  example  in  agriculture,  environment, 
telecommunications,  infrastructures,  industry.  A  number  of  these  sectoral  policies  have 
been adopted and are in the process of being implemented. 

The Commission of the UEMOA has, through increased donor support, developed important 
technical  and  administrative  capacities,  and  has  thus  been  the  driving  impulsion  in 
strengthening  and  further  deepening  economic  integration  between  its  member  states.  A 
special  solidarity  fund,  the  'Fonds  d'Aide  à  l'Intégration  Régionale'  was  created  in  the 
UEMOA treaty, in order to finance the balanced land settlement of the community territory, 
and its interconnectivity, while reducing regional discrepancies. 

UEMOA  adopted  a  "Programme  Economique  Régional"  (PER)  in  2006,  in  order  to  further 
deepen  regional  economic  integration,  and  to  reinforce  the  regional  growth  strategy  for  the 
2006-2010 period. It aims at implementing over 60 infrastructure projects, a common market, 
macroeconomic  convergence  and  business  development,  which  will  ultimately  improve  the 
visibility and utility of regional integration.  

29 

Benin, Burkina Faso, Guinea Bissau, Ivory Coast, Mali, Niger, Senegal, Togo. 

EN 

58 

   EN 

 
                                                 
The UEMOA has the exclusive power to negotiate trade agreements on behalf of its members, 
and was mandated to conduct EPA negotiations alongside ECOWAS.  

UEMOA and ECOWAS have decided to implement an "accelerated strategy of the integration 
process in West Africa", which provides for a consultation and convergence process between 
both regional organisations.  

In  order  to  ensure  the  harmonisation  and  coordination  of  policies  and  programmes,  the 
Presidents  of  both  Commissions  meet  twice  a  year  to  establish  the  common  political  and 
economic orientations and a joint ECOWAS and UEMOA Technical Secretariat has been set 
up. As an important result of this Committee, ECOWAS has adopted the UEMOA's common 
external tariff (CET) in the framework of the customs union. 

EN 

59 

   EN 

 
ECOWAS

Cape Verde
Gambia
Ghana
Guinea Conakry

Liberia

Nigeria

Sierra Leone

Benin

Burkina Faso

Ivory Coast

Guinea Bissau

Senegal

UEMOA

Mali

Niger

Togo

ECCAS

São Tome and Principe

CEMAC

Cameroon
Central African Republic
Gabon
Equatorial Guinea
Rep. Congo
Chad

COMESA

Egypt
Libya

IGAD

Djibouti

Somalia

Eritrea

Ethiopia

Sudan

Kenya
Uganda

IOC

Dem. Rep.

Congo

Burundi

Angola

Rwanda

African Regional Economic Communities:

CEMAC: Economic and Monetary Community of Central Africa 

COMESA: Common Market for Eastern and Southern Africa

EAC: Eastern African Cooperation

ECCAS: Economic Community of Central African States

ECOWAS: Economic Community of Western African States

IOC: Indian Ocean Commission

SACU: Southern African Customs Union

SADC: Southern African Development Community

UEMOA: Economic and Monetary Union of West Africa

IGAD: Intergovernmental Authority for Development

EN 

SADC

Tanzania

EAC

Malawi

Zambia

Madagascar

Comoros

Mauritius

Seychelles

La Réunion

Mozambique

Zimbabwe

Swaziland

Botswana

Lesotho

Namibia

South Africa

SACU

60 

EN 

 
  
6. 

Pacific 

The Pacific region has a number of regional organizations, covering a wide range of areas of 
cooperation between the islands. 

The Pacific Islands Forum is the premier regional policy-making body of the self-governing 
states  in  the  Pacific.  Established  in  1971,  its  membership  includes  14  of  the  Pacific  ACP 
countries30  together  with  Australia  and  New  Zealand.  As  regards  security,  the  Biketawa 
Declaration  of  2000  establishes  a  framework  for  Forum  intra-state  security  cooperation, 
which  calls  for  Forum  Foreign  Affairs  Ministers  to  meet  as  part  of  an  ad  hoc  crisis 
management mechanism for the region. 

The  Forum  is  served  by  its  Secretary-General,  supported  by  the  Forum  Secretariat.  The 
Secretariat’s overall objective is to service the member states and to promote Pacific regional 
cooperation,  particularly  on  economic  and  trade  matters.  It  also  acts  as  the  Forum’s 
administrative arm,  implementing its decisions, including  delivering  development assistance 
to Member States. In the case of trade-related assistance, it can also act as an implementing 
agency. 

The  Forum  Secretary-General  is  also  the  permanent  Chair  of  the  Council  of  Regional 
Organisations in the Pacific (CROP), which brings together the Forum Secretariat and nine 
other Pacific regional organisations: Pacific Forum Fisheries Agency (FFA); Pacific Islands 
Development  Programme  (PIDP);  Secretariat  for  the  Pacific  Community  (SPC);  South 
Pacific  Applied  Geoscience  Commission  (SOPAC);  South  Pacific  Regional  Environment 
Programme (SPREP); South Pacific Tourism Organisation (SPTO); University of the South 
Pacific (USP); South Pacific Board for Educational Assessment (SPBEA); and Fiji School of 
Medicine (FSchM). 

The  October  2005  meeting  of  Forum  Heads  of  State  and  Government  made  two  important 
decisions aimed at strengthening regional cooperation. Leaders approved an agreement giving 
the forum legal personality under international law. They also approved the Pacific Plan and a 
roadmap for its implementation. This decision represents the culmination of a process started 
in  2003,  at  the  initiative  of  the  New  Zealand  Forum  Chair,  aimed  at  strengthening  Pacific 
regionalism.  The  Plan,  covering  the  years  2005-2015,  has  been  presented  as  a  dynamic 
framework  for  strengthened  regional  cooperation  and  integration.  However,  the  effective 
realization of the Plan is taking longer than it should. 

Presently, regional cooperation in the Pacific is neither broad nor deep. Reasons include the 
geography  of  the  region,  the  fact  that  many  Pacific  countries  are  still  relatively  young  as 
independent states and therefore particularly sensitive about issues pertaining to sovereignty, 
as well as the asymmetry between Australia and New Zealand on the one hand and the Pacific 
ACP countries on the other. 

The  Pacific  Islands  Countries  Trade  Agreement  (PICTA)  entered  in  force  in  April  2003. 
Eleven  out  of  fourteen  countries  have  ratified31  it.  Notification  and  rules  of  origin 

30 

31 

Australia,  Cook  Islands,  Federated  States  of  Micronesia,  Fiji,  Kiribati,  Nauru,  Niue,  New  Zealand, 
Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Republic of the Marshall Islands, Tuvalu 
and Vanuatu. 
Cook Islands, Fiji, Kiribati, Nauru, Niue, PNG, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu. 

EN 

61 

   EN 

 
                                                 
requirements  have  been  fulfilled.  Six  countries  have  made  formal  announcements  on  their 
readiness  to  trade  under  PICTA.  Some  domestic  legislation  is  nonetheless  still  required  for 
trade  to  begin  in  most  countries.  An  outright  PICTA  customs  union  is  thought  to  be 
inappropriate  by  island  leaders.  The  Forum  Trade  Ministers  have  officially  launched  the 
negotiation of a trade in services Agreement as an extension to PICTA in March 2008. The 
aim is to conclude this Agreement by the end of the year 2008. 

FTA  negotiations  with  Australia  and  New  Zealand  may  begin  this  year  under  the  Pacific 
Agreement  on  Closer  Economic  Relations  (PACER,  of  which  PICTA  is  the  first  stage).  A 
key feature of PACER is the ongoing Regional Trade Facilitation Program. To date, eleven 
Forum countries, including Australia and New Zealand, have ratified PACER. 

The  Melanesian  Spearhead  Group32  (MSG)  was  founded  in  1994  and  revised  in  October 
2005.  The  new  approach  has  shifted  to  a  negative  list  of  products  (rather  than  the  present 
positive list) on which tariffs are scheduled to be phased out over a period of 1 to 8 years. A 
services  annex  has  yet  to  be  developed.  The  MSG  brings  together  by  far  the  biggest  ACP 
economies  of  the  Pacific  but  is  more  of  a  political  counterweight  to  Australia  and  New 
Zealand in a Forum context than an effective trade bloc. 

32 

PNG, Fiji, Solomon Islands, Vanuatu 

EN 

62 

   EN 

 
                                                 
Northern Mariana Islands

PIF / PARTA

Guam

Marshall Islands

PICTA

SPC

Palau

MSG

Micronesia

Solomon Islands

Papua New Guinea

Nauru

Kiribati

Australia

Vanuatu

Tuvalu

Fiji

Samoa

Cook Islands

New Zealand

New Caledonia

Tonga

Niue

Wallis & Futuna

Pitcarin
Islands

Tokelau

French 
Polynesia

American
Samoa

Pacific Regional Economic Communities

PIF / PARTA: Pacific Island Forum / Pacific Regional Trade Agreement
16 listed members plus 2 associate members: New Caledonia and French Polynesia
PICTA: Pacific Island Countries Trade Agreement
12 signatories as of November 2006. 

SPC: Secretariat for the Pacific Community
Not strictly an economic community. Intergovernmental co-
operation.
MSG: Melanesian Spearhead Group

EN 

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EN 

 
  
  
ANNEX 2: REVIEW OF EXISTING LITERATURE ON REGIONAL INTEGRATION IN ACP 

The following is a summary of a study commissioned to the Overseas Department Institute 
(ODI) by the European Commission for the purpose of this Background Document, entitled 
"Regional integration in ACP - A review of the literature". The report is available at 
http://ec.europa.eu/development/icenter/repository/Regional-Integration-Report-18-09-
2008_en.pdf 

The  literature  review  focuses  on  literature  on  broader  regional  integration;  not  just  the 
removal of barriers to trade, but also policy co-ordination and functional co-operation. 

The  theoretical  effects  of  the  removal  of  barriers  to  trade  are  well  documented,  and 
empirical  evidence  largely  backs  them  up.  The  removal  of  tariffs  leads  to  increased  trade, 
creating favourable conditions for growth. However, if the potential for intra-regional trade is 
low, tariff removal alone will not be as effective a tool. There are several so-called "dynamic" 
effects from the removal of barriers to trade. An increase in FDI flows is one of these effects, 
with FDI flows from outside the region increasing in particular as a result of the removal of 
barriers  to  trade.  There  is  the  risk  that  these  FDI  flows  will  be  concentrated  on  the  larger 
markets  in  the  region,  or  countries  neighbouring  these  larger  markets.  Other  "dynamic" 
effects include increased competition, knowledge spillovers from research and development, 
and eventual economies of scale.  

Removing  barriers  to  trade  therefore  has  an  indirect  positive  effect  on  growth  through  the 
mechanisms  of  trade,  FDI  and  technology  transfer.  However,  it  is  not  clear  if  regional 
integration alone promotes convergence among members. A specific tool which can help the 
convergence  of  members  in  an  RTA  is  the  special  differential  treatment  of  less  developed 
countries; SACU implements such a system with restrictions permitted for some of the poorer 
members. 

In  the  area  of  policy  co-ordination,  theoretical  effects  are  again  well  documented,  though 
unfortunately ACP-specific based evidence is more limited. Co-operation on investment rules 
boosts FDI, in particular extra-regional FDI; this view further  builds on the  finding that the 
removal of barriers to trade has a similar effect. There are some sceptical views on investment 
rule  co-operation  in  a  regional  context  and  these  highlight  the  need  for  countries  to  reach  a 
certain level of development and governance for the benefits to outweigh the possible costs.  

Theoretically,  the  free  movement  of  labour  is  meant  to  lead  to  the  equalisation  of  wages 
within  a  region.  Empirical  evidence  points  to  increased  migration  as  a  result  of  the  free 
movement of labour. Outside the Caribbean, there is, however, little progress in this field.  

Harmonised  standards  should  have  positive  long  term  effects  by  allowing  firms  to  increase 
exports  or  enter  value  chains,  although  in  the  short  term  effects  could  be  negative  for  local 
firms  having  to  comply  with  standards,  and  consumer  prices  in  the  region.  ACP  countries 
have not yet co-ordinated standards. 

Functional economic co-operation, including regional public goods, is a broad area and can 
often add more value to regional integration than trade liberalisation alone.  

Financial market integration can contribute to economic growth through addressing the lack 
of  liquidity  that  many  small  countries  have,  and  also  by  increasing  intra-regional  capital 

EN 

64 

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flows. There are plans to integrate the stock markets of Southern and Eastern Africa but no 
experience  in  the  ACP  overall.  Studies  point  that,  due  to  the  need  of  complex  regulation, 
integration in this area needs to occur at the right pace. 

Monetary  integration  provides  financial  stability  and  reduces  transaction  costs.  There  are 
already  four  monetary  unions  within  the  ACP.  Outside  the  existing  monetary  unions  in  the 
ACP, the required convergence of macro-economic indicators for a monetary union appears 
not to exist.  

Businesses need to rise to the challenge of the international trading environment. To meet this 
challenge, business co-operation and R&D at regional level can help. There are an increasing 
number of regional business associations in ACP countries. 

Poor infrastructure is an important impediment to intra-regional trade. Effective regional co-
ordination  would  reduce  the  time  of  transit  and  uncertainty  for  traders.  Both  theory  and 
examples  from  ACP  countries  show  that  the  results  of  better  regional  infrastructure  are 
reduced  transport  costs.  These  reduced  transport  costs  sow  the  seeds  for  increased  intra-
regional trade. A lack of regional co-operation acts as a constraint to growth. Co-operation in 
energy  and  water  leads  to  economies  of  scale;  regional  co-operation  could  be  particularly 
effective in ACP countries, where most individual markets are not big enough to benefit from 
this effect. However, few regional ACP power grids are currently fully functional.  

Regional  co-operation  in  the  area  of  land,  fisheries  and  forests  should  both  promote  the 
sustainable use of resources and combat illegal usage. Co-operation in the area of agriculture 
can  help  with  the  issues  of  food  sovereignty  and  food  security.  Four  ACP  regions  are 
currently  in  the  process  of  implementing  regional  food  and  agricultural  trade  strategies  but 
effects are no measurable at his stage. 

Increased  migration  poses  challenges  related  to  the  spread  of  communicable  diseases  in 
particular,  and  improved  regional  disease  management  is  likely  to  increase  the  growth 
prospects  of  African  countries.  Migration  itself  also  requires  management;  while  healthy, 
integrated  migrants  can  be  a  valuable  resource  to  the  host  country,  many  African  countries 
have difficulties to manage heavy migration flows. 

Social  cohesion  policies  have  the  advantage  of  reducing  disparities  within  a  region,  and 
preventing the "race to the bottom" with labour wages. ACP regions are less advanced than 
rest  of  the  world  regions  in  the  field  of  social  policies.  Some  ACP  regions  do  use  trade 
the 
measures 
institutionalisation of social dialogues. 

issues,  and  some  progress  has  been  made 

to  deal  with  social 

in 

Finally,  there  are  several  benefits  of  political  co-operation.  Political  integration  may  be  a 
pre-requisite for economic integration (e.g. the EU); it may accompany economic integration; 
or it may be a result of economic integration. An example of the last is the case where higher 
income from economic integration promotes the understanding between countries.  

A political advantage of entering a regional integration agreement is the joining of interests 
into  one  stronger,  united  voice  for  trade  negotiations.  A  strong  motivation  for  political 
integration is that of peace and security. Peacekeeping operations can kick-start an economy 
at a vital time. In the ACP regions, security components are increasingly included in regional 
integration  programmes,  and  several  organisations  have  emerged  as  conflict  managers  and 
peace keepers. It is worth noting that "lead nations" such as South Africa and Nigeria have a 

EN 

65 

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complicated role in the peace keeping process; on one hand, they have the necessary resources 
to lead such missions, but on the other hand, weaker countries can find the military power of 
such countries a threat.  

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ANNEX 3: STOCKTAKING OF EPAS AND REGIONAL INTEGRATION 

At  the  end  of  2007,  the  negotiations  with  the  fifteen  CARIFORUM  countries  were 
successfully concluded. The Agreement comprises all ACP countries in the Caribbean region 
and  covers  all  subjects  originally  identified  for  negotiations.  This  Agreement  will  promote 
integration  in  the  Caribbean  with  regard  to  trade  in  goods,  services,  investment  and  a  wide 
range of trade related areas.  

The  Caribbean  EPA  follows  the  two  principles  applied  by  the  region's  own  integration 
process,  namely,  those  of  variable  geometry  and  differentiation,  which  allow  taking  into 
consideration  the  different  levels  of  development  and  integration  existing  in  the  region. 
Within the EPA the region has committed to remove tariffs on 80% of EU imports over 15 
years, while certain products are excluded from liberalization and others are liberalised within 
a  20-25  years  timeframe.  The  Agreement  includes  commitments  on  customs  and  trade 
facilitation,  such  as  the  introduction  of  a  single  administrative  document  in  Cariforum 
countries. In the area of sanitary and phytosanitary standards (SPS) and technical barriers to 
trade  (TBT)  the  Parties  agreed  to  cooperate  so  as  to  increase  the  capacity  of  the  region  to 
apply internationally recognised standards.  

The  Caribbean  EPA  also  contains  a  comprehensive  section  on  Investment  and  Services  as 
well  as  on  specific  rules  on  E-commerce.  On  both  services  and  investment  the  Agreement 
aims  at  fostering  predictability  and  transparency.  In  the  area  of  services,  liberalisation 
commitments focus on sectors that are expected to have a positive development impact, areas 
in  which  CARIFORUM  states  are  looking  for  FDI  or  new  technologies  as  well  as  sectors 
important  to  create  economic  opportunities  including  in  out-sourcing.  Special  reservations 
have  been  maintained  for  small  and  medium  sized  enterprises  and  public  services  remain 
excluded. In addition the EPA includes provisions aimed at fighting against corrupt practices 
of investors, as well as binding provisions on non-lowering of standards in the environmental 
and social fields and for cultural diversity laws and regulations.  

Finally  the  Caribbean  EPA  contains  also  a  comprehensive  set  of  trade  related  rules  e.g.  on 
intellectual  property  rights  (IPRs),  the  protection  of  personal  data,  government  procurement 
(focusing on transparency), on competition policy, and social and environmental aspects.  

Further extensive information on the contents of the Caribbean EPA and its expected benefits 
can  be  found  at 
the  Caribbean  Regional  Negotiation  Machinery: 
http://www.crnm.org. 

the  website  of 

Outside the Caribbean in all other ACP regions, interim agreements were concluded that 
basically  focus  on  trade  in  goods  and  also  contain  to  a  varying  degree  certain  trade  related 
rules  while  rendezvous  clauses  foresee  the  negotiation  of  the  still  missing  EPA  elements 
relating to rules, services and investment, over coming months. Except for the agreement with 
the  East  African  Community  (EAC)  where  all  members  are  part  of  the  interim  EPA,  the 
interim agreements generally include only certain but not all members in each region. Hence, 
they are still incomplete and need to be turned into comprehensive EPAs over coming months 
in  order  to  release  their  full  potential  for  regional  integration.  In  this  context  and  in  all 
regions, the commitment to do so by the end of 2008 (by mid 2009 in the cases of EAC and 
West Africa) has been re-affirmed by the ACP and EU sides.  

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In  addition  it  should  be  noted  that  in  a  number  of  regions  and  partly  in  anticipation  of  full 
EPAs, discussions and concrete steps towards deeper integration are already ongoing. In 
West  Africa  for  instance,  a  regional  policy  framework  for  competition  was  defined  and  an 
external  tariff  set  for  countries  of  the  West  African  Economic  and  Monetary  Union 
(WAEMU),  while  in  the  Pacific  discussions  about  a  regional  services  agreement  and  the 
establishment of certain trade related rules are progressing.  

Rules of origin (RoO) are important for allowing cumulation between producers in different 
ACP countries and hence they are important for the integration of production processes within 
and between regions particular in Africa. The EPA RoO are based on the Cotonou rules with 
certain  substantial  improvements  in  the  areas  of  agricultural  products,  fishery  products  and 
textiles.  They  were  designed  such  that  a  maximum  of  integration  potential  will  be  ensured 
within and among the various regions.  

In all regions, EPA related support is key in helping with the EPA process, implementation 
of  commitments  and  regional  integration.  This  important  topic  is  covered  separately  in  the 
document.  

The interim agreement with the East African Community (EAC)33 focuses on an agreement 
on  trade  in  goods  but  also  contains  a  regional  chapter  on  fisheries  and  provisions  on 
institutional  arrangements.  Despite  the  fact  that  it  is  as  yet  only  an  interim  agreement,  it 
already develops a very high degree of regional coherence since the agreement is concluded 
with  all  five  EAC  members  acting  as  a  customs  union.  Thus  liberalisation  commitments 
towards  the  EU  are  identical  for  all  EAC  countries  and  consolidate  the  internal  cohesion 
process  of  the  grouping.  Since  EAC  members  have  also  linkages  with  the  Eastern  and 
Southern African group (ESA) and the Southern African Development Community (SADC), 
close  coordination  between  the  EAC,  ESA  and  SADC  processes  is  needed  as  well  as  a 
variable and flexible approach to develop the integration aspects of the wider region gradually 
and in harmony. Rendezvous clauses in the interim agreement foresee negotiations towards a 
full EPA comprising all relevant EPA elements by mid 2009. 

In the Eastern and Southern African grouping (ESA) group, six members34 have initialled 
the interim EPA which focuses on an agreement on trade in goods but also contains a regional 
chapter on fisheries and institutions as well as development cooperation. Rendezvous clauses 
foresee the negotiations towards a full EPA containing all other EPA elements by the end of 
the year. Negotiations on SPS/TBT, Trade facilitation and a Dispute Settlement Mechanism 
are  already  far  advanced,  negotiations  on  services,  investment,  agriculture  and  development 
are  ongoing  as  are  discussions  on  other  important  issues  such  as  trade  related  rules  for 
example  on  sustainable  development,  transparency  in  public  procurement  and  competition 
law.  

Five  countries35  in  the  Southern  African  Development  Community  (SADC)  group  have 
concluded  an  interim  agreement  which  focuses  on  trade  in  goods.  The  agreement  also 
contains  regional  rules  on  SPS  and  TBT,  trade  facilitation,  institutions  and  development 
cooperation.  Rendezvous  clauses  foresee  the  continuation  and  conclusion  of  negotiations 

33 
34 

35 

Kenya, Tanzania, Uganda, Rwanda, Burundi 
Mauritius, Comores, Seychelles, Madagascar, Zimbabwe; Zambia also initialled but does not take part 
in the goods agreement. 
Botswana, Namibia, Lesotho, Swaziland, Mozambique. 

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during 2008 to establish a full EPA containing all relevant issues. Most members in the region 
are highly interested in particular in progressing towards a services and investment agreement 
as part of the full EPA.36 As regards the regional coverage and in addition to the five countries 
that concluded the interim agreement, Angola has also actively engaged in the negotiations. 
Finally South Africa is equally part of the SADC EPA negotiation group but has not signed 
the  interim  agreement.  Following  a  period  of  consideration  of  its  position,  it  has  however 
recently  re-opened  negotiations  on  trade  in  goods.  To  tap  the  full  EPA  potential  to  boost 
regional integration and development, it is highly desirable that South Africa will be part of 
the full EPA.  

In  Central  Africa  an  interim  EPA  was  concluded  with  only  one  country  in  the  region,  i.e. 
Cameroon  containing  trade  in  goods,  trade  facilitation,  SPS  and  TBT  clauses,  institutional 
arrangements and development cooperation. The region has recently indicated its eagerness to 
move forward towards a full EPA containing all elements and comprising all members of the 
region.  

In  West  Africa  interim  agreements  were  concluded  with  two  countries  in  the  region,  Côte 
d'Ivoire and Ghana. The contents comprise trade in goods, facilitation, SPS, TBT, institutions 
and  development  co-operation.  At  Heads  of  States  and  Government  level,  the  entire  region 
has decided to resume negotiations and aim at concluding a full EPA by mid 2009.  

In  the  Pacific,  an  interim  agreement  was  concluded  with  the  economically  most  important 
countries  Papua  New  Guinea  and  Fiji.  The  interim  arrangement  contains  a  trade  in  goods 
agreement,  rules  on  trade  facilitation,  SPS  and  TBT,  institutional  arrangements  and  a 
rendezvous  clause  to  conclude  a  full  EPA  in  2008.  A  slow  and  careful  resumption  of  the 
negotiations  involving  the  whole  region  is  currently  ongoing.  The  region  is  particularly 
interested  in  negotiating  a  services  agreement  within  an  EPA  and  in  particular  in 
arrangements for the temporary movement of labour and is currently considering its options. 
In  parallel  to  negotiations  with  the  EU,  discussions  in  the  Pacific  on  the  establishment  of 
regional arrangements in services and certain trade related rules are also ongoing.  

36 

All except Nambia.  

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ANNEX 4: EC FINANCIAL SUPPORT FOR REGIONAL INTEGRATION 

Initial commitments on projects with a regional focus in ACP countries for the 8th and 9th EDF (covers multi-
country, regional and national programmes between 1996 and 2007) (million euros)  

Business 
Development 

Infrastructure 

Sustainable 
Development 

Regional 
Governance 

TOTAL 

Regional 
Integrated 
Markets 

 134,35 
 121,8 
 121,8 

 28,5 
 28,5 

Region 

Inter regional (sub-total) 
West Africa (sub-total) 
Regional 
Guinée 
Mali 
Central  Africa 
total) 
Regional 
Cameroun  
Cameroun - Tchad 
Great Lakes 
RCA 
ROC 

(sub-

 276,453 
 2,485 

 2,485 

 5,5 

 5,5 

 122,6 
 122,6 

 6,412 

 119,45 
 167,15 
 34,7 

 132,45 

 196,24 

 138,24 

 55 

 3 
 210,496 
 21 

 50 

Ethiopia  & 

Rwanda/Regional 
ESA (sub-total) 
COMESA 
East Africa 
Ethiopia-Djibouti 
IGAD 
IOC 
Kenya 
Somalia, 
Kenya 
Uganda 
SADC (sub-total) 
Regional 
Caribbean 
Regional 
CARIFORUM 
Barbados 
Dominican republic 
Dominica 
Guyana 
Haiti 
Republic 
Jamaica  
Suriname 
Trinidad and Tobago 
Pacific 
Regional 
PALOP 
Entire ACP Total 

- 

Dominican 

 6,412 

 119,996 

 19,09 
 19,09 
 63,5 
 37 

 45,27 
 45,27 
 184,044 

 5 

 107,584 
 5 

 21,5 

 11,2 
 11,2 

 45 
 26,46 

 4 
 4 

 19,5 
 39,2 
 39,2 
 45,005 

 13,755 

 0,55 

 30,7 

 0 

 501,04 

 524,165 

 777,541 

 818,506 
 86,873 
 79, 
 6,4 
 1,473 

 43,15 
 38,15 

 5 

 127,835 
 18 
 3 

 35,5 

4 
 67,335 
 45,514 
 45,514 
 41,836 

 8,787 
 13,399 

 0,45 

 19,2 
 70,276 
 52,576 
 17,7 
 1233,99 

 29,723 
 123,9 
 123,9 

 13,1 
 8,1 

 5 

 3,532 

 1 

 1,532 

 1 
 7,95 
 7,95 
 5,73 
 2,63 

 3,1 

 4,19 
 4,19 

 188,124 

 1378,482 
 502,208 
 359,4 
 6,4 
 136,408 

 286,49 
 74,75 
 5,5 
 138,24 
 5 
 55 
 5 

 3 

 470,875 
 161,6 
 3 
 50 
 1 
 35,5 
 127,94 

4 
 87,835 
 157,024 
 157,024 
 340,115 
 39,63 
 8,787 
 137,838 
 10 
 0,55 
 0,45 

 45 
 47,96 
 30,7 
 19,2 
 89,666 
 71,966 
 17,7 
 3224,861 

Source: European Commission 

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ANNEX 5: OVERVIEW OF 9TH EDF REGIONAL PROGRAMMES (2002-2007) 

1. 

Eastern and Southern Africa 

Main  strategy:  economic  liberalisation  (trade  and  tax  policy)  and  investment  promotion  in 
order to remove supply side constraints. 

There are three main areas of focus in the RIP: 

1.  Economic  integration  and  trade  –  45  to  55%  of  the  budget.  The  focus  is  on  supply 
capacity, using public sector tools. In particular, there are attempts to eliminate overlapping 
and conflicting programmes and encourage the economic integration of states. Action in the 
field  of  economic  integration  takes  into  account  the  need  to  prepare  for  the  negotiation  and 
implementation of the EPA. 

2. Transport –  15 to 25% of  the  budget. Intervention in this area consists of a master-plan 
focussing on investment opportunities and priorities.  

3.  Natural  resources  –  15  to  25%  of  the  budget.  Natural  resources  are  to  be  tackled  at 
regional level. Sustainable management plans for natural resources are to be developed. 

No specific intervention for HIV/Aids is planned although it was identified as a key hindering 
factor for the region. 

2. 

Southern Africa 

Main  strategy:  export  led  growth  and  economic  liberalisation,  plus  the  promotion  of  the 
supply side. 

There are two main focuses in the RIP 

1. Economic integration and trade – 35 to 45% of the budget. There is a specific focus on 
supply capacity and public sector tools. The aim is to encourage foreign investment for export 
led growth. The need to prepare for the EPA is taken into account. 

2. Transport and infrastructure – 35 to 45% of the budget. The EU is to provide assistance 
from  its  experience  with  trade  facilitation.  The  NIPs  contain  considerable  infrastructure 
investment, and the RIP will attempt to co-ordinate this investment.  

Non-state actors are also to be involved on a regional level.  

3.  West Africa 

Main  Strategy:  UEOMA  and  ECOWAS  are  the  key  partners.  The  aim  is  to  assist  the  long 
term  convergence  of  these  two  key  partner  organisations.  This  includes  assisting  the 
harmonisation  process  in  order  that  goods  and  people  can  circulate  freely  through  transport 
investment.  

1.  Economic  integration  –  This  includes  assisting  the  formation  of  the  ECOWAS  customs 
union  and  the  free  circulation  of  goods  in  the  West  Africa  area;  in  particular,  there  is  help 

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with the continuous dialogue process. Assistance for private sector development is a further 
element. Considerable help will be offered to improve institutional capacity. Assistance with 
preparation for EPA negotiations will be offered. 

2. Transport and infrastructure – The target area is the harmonisation of national policies 
and  a  focus  on  the  facilitation  of  circulation  (non-physical barriers, security, etc). The NIPs 
focus on investment in the inter-regional sections of the transport network. 

3. Experience sharing – particularly on public health, further education and research. 

4. Conflict prevention 

4. 

Central Africa 

Main strategy: the consolidation of a Central African regional space and the integration of this 
space in to the world economy. 

1.  Economic  integration  –  25  to  30%  of  the  budget.  The  main  aim  is  deeper  regional 
integration to increase growth and reduce poverty. Regional organisations should be made to 
work  more  effectively.  Assistance  will  be  provided  towards  creating  a  customs  union  and 
common market, and also in the convergence of economic policies. Private sector assistance 
will be provided and non-state actors will be involved more. Assistance will be provided to 
assist with transition and restructuring required from the EPA. 

2.  Transport  and  telecommunications  –  35  to  40%  of  the  budget.  The  aim  is  to  improve 
land-based  transport  networks.  This  includes  the  improvement  of  CEMAC's  competence  on 
transport,  analysis  of  obstacles  in  conjunction  with  the  private  sector,  the  definition  of  a 
regional  network  and  the  development  of  an  open  and  competitive  telecommunications 
market.  

3.  Sustainable  management  of  natural  resources  –  20  to  25%  of  the  budget.  The 
ECOFAC37  programme  will  be  continued.  RAPAC38  will  be  made  autonomous  and  able  to 
manage  money.  Assistance  will  be  provided  to  make  the  national  conservations  plans  both 
regionally 
integrated  and  managed  by  an  existing  regional  organisation.  Several 
environmental conventions should be implemented (e.g. Kyoto). 

5. 

Pacific 

1. Regional integration – 31% of the budget. The key focus is the strengthening of capacities 
for  regional  integration.  This  includes  the  strengthening  of  negotiating  capacities  in  the 
context of the WTO and EPA. Assistance is to be provided for the mutual removal of tariffs. 
Help  will  be  offered  to  private  sector  companies  so  that  they  can  fully  benefit  from  new 
opportunities. Technical assistance will be given with public financial administration and tax.  

2. Human resource development – 28% of the budget. Technical and Vocational Education 
and training is included in the NIPs. The RIP is to assist both with basic education and TVET 
at regional level. 

37 
38 

Conservation et utilisation rationnelle des ECOsystèmes Forestiers d'Afrique Centrale.  
Réseau des Aires Protégées d'Afrique Centrale. 

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3. Fisheries – 17% of the budget. The focus is the strengthening of regional institutions for 
fisheries. 

6. 

Caribbean 

The  creation  of  a  harmonised  regional  economic  space  to  improve  competitiveness  and 
integration  to  world  economy  will  use  the  majority  (75  –  90%)  of  the  budget.  This  general 
objective  focuses  more  specifically  on  regional  economic  integration,  integration  into  the 
world  economy,  and  economic  repositioning  allowing  the  region  to  take  advantage  of  new 
opportunities (with a specific focus on SMEs). The preparation for negotiation of EPAs also 
falls within this category. 

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ANNEX 6: EVALUATION OF EDF PROGRAMMES 

1. 

Evaluations of 9th EDF Regional Strategies and Programmes 

Four  of  the  six  RIPs  under  the  9th  EDF  have  been  evaluated  by  external  consultants.  The 
following recurring themes have been identified: 

–  Regions  are  not  clearly  defined  (multiple  RTA  membership  /  delimitations  of  regions) 

hence there is a "choice of partner" problem for the EC. 

–  Transport intervention at a regional level is not effective. 

–  The RIPs and NIPs are often not coherent. 

–  Poverty issues are not being tackled satisfactorily at a regional level. 

–  Capacity constraints to implement regional policy exist due to weak institutions. 

–  There  is  the  need  to  involve  non-governmental  actors  on  a  regional  level.  However,  in 

general terms, such actors tend to think more on a local level. 

More  specifically,  below  are  presented  the  highlights  of  the  evaluation  reports  for  the 
concerned regions: 

Caribbean  

Source: Evaluation of the Commission's Regional Strategy for the Caribbean. April 2005 - Evaluation of past 
and present intervention = chiefly 8th EDF effectiveness and 9th EDF strategies. 

–  No policy dialogue exists for a long-term vision of regional integration. Institutions set up 

by the Commission are deemed not sustainable and still require external assistance. 

–  Regional intervention is effective in the areas of trade, cultural identity, product identity, 

regional marketing, tertiary education and crime prevention. 

–  Poverty and gender issues are not being tackled in a regional integration context. 

–  Roles and responsibilities are not clearly marked out for actors on the Caribbean and EC 
sides.  CARIFORUM  has  helped,  but  lacks  the  necessary  capacity  to  ensure  regional 
strategic objectives are achieved.  

–  The regional approach is being taken, but does not pay enough attention to specificities of 

the Caribbean. 

–  The RIP and NIP are considered not coherent. 

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SADC 

Source: Evaluation of the Commission's support to SADC: Regional Level. October 2007. - An evaluation for the 
period 1996-2007, chiefly analysing 8th and 9th EDF effectiveness. Some projects from 6th and 7th EDF were still 
active.  

–  Regional intervention does not tackle the multiple membership problem, e.g. in relation the 

EPA. 

–  There  is  a  focus  on  capacity  building  activities  to  help  SADC,  the  aim  being  to  make 
SADC  capable  of  managing  its  own  aid.  Currently  SADC  ownership  of  regional 
programmes  is  not  strong  and  SADC  member  states  do  not  sufficiently  support  SADC 
national committees. 

–  Transport  intervention  is  working  at  a  national  level  but  not  at  a  regional  level.  The 
liberalisation  reforms  of  SADC  states  are  limiting  the  effectiveness  of  transport 
intervention. 

–  EC support is increasingly poverty orientated, but does not appear to be effective. 

HIV/AIDS regional strategies are in place but appear not to be working. 
There is a need to look at the long term aspect of food security, and to look at it on a regional, 
not a national level. 

–  Non State Actors generally are not able to focus on regional issues. 

–  The NIP and RIP are considered as not always coherent. 

–  Delegations with regional responsibilities need to consider more the regional aspects. 

Central Africa 

Source: Evaluation de la Stratégie Régionale de la CE en Afrique Centrale. December 2006 - An analysis of the 
effectiveness of past experience (8th EDF) and ongoing experience at the time of writing (9th EDF). 

–  NIP – RIP coherence is considered weak, particularly for poverty reduction. 

–  Central  Africa  is  not  clearly  delimited  as  a  region.  There  is  therefore  the  lack  of  a  clear 

regional partner for the EU. 

–  Transport intervention on a national level is strong, but it is not having a significant effect 

on intra-regional exchanges. 

–  Natural resource intervention has been successful, but is not sustainable, and does not have 

enough support from national governments. 

–  Citizens do not recognise the region. 

Pacific 

Source: Evaluation of the Commission's support to the ACP Pacific Region. September 2007 - An evaluation for 
the period 1997-2007 (implementation up to 2005 analysed) - 8th and 9th EDFs. 

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–  General  assistance  is  seen  as  weak  in  the  area  of  poverty  reduction;  intervention 

specifically for poverty reduction has not been programmed. 

–  There is a lack of coherence between RIP and NIP. Regional and national strategies have 

been designed separately. 

–  Environmental and natural resource assistance is considered not sufficient. 

–  Commission’s  intervention  in  regional  integration  and  trade  is  generally  quite  recent  and 

therefore could not be assessed at the time of writing the report. 

2. 

Issues relevant for regional integration in thematic evaluations of support 

Governance 

Source: Thematic Evaluation of EC Support to Good Governance. June 2006 

–  Governance  is  included  in  regional  level  co-operation  agreements  and  RSPs  at  a  policy 

level.  

–  The EC is contributing to region specific governance objectives, but the overall effect (on 

systemic change) is not clear, nor is the sustainability of the contribution. 

Private Sector Development 

–  Source: EC Support for Private Sector Development. December 2005. 

-  There  is  no  methodical  process  for  selecting  an  area  of  intervention,  which  limits  the 
effectiveness of interventions. 
- Activities are not designed so as to improve the competitiveness of the private sector in a 
sustainable manner. 
- There is no systematic attempt to maximise complementarities between areas of intervention 
or to ensure coherence between private sector development and other sectors or other EU 
policies.  

Co-ordination, complementarity and coherence. November 2007 

–  No effects on policy at a regional level have been identified. 

Développement rural et agricole. June 2007  

–  No effects on policy at a regional level have been identified. 

Co-ordination of trade building capacity in partner countries. February 2006  

–  No effects on policy at a regional level have been identified. 

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ANNEX 7: REFERENCES 

Africa-EU  (2007),  The  Africa-EU  Strategic  Partnership  –  A  Joint  EU-Africa  Strategy, 
Lisbonne, 8-9 December 2007. 

European  Commission  (1995),  Economic  Community  support  for  regional  economic 
integration efforts among developing countries, 16 June 1995, COM (1995) 219 final 

European Commission (2003), European Community co-operation with third  countries: The 
Commission's approach to future support for the development of the business sector, 19 May 
2003, COM (2003) 267 final 

European  Commission  (2004),  A  stronger  partnership  for  the  outermost  regions,  26  May 
2004, COM (2004) 343 final 

European  Commission  (2005),  EU  Strategy  for  Africa:  Towards  a  Euro-African  pact  to 
accelerate Africa’s development, 12 October 2005, COM (2005) 489 final 

European  Commission  (2006a),  An  EU-Caribbean  partnership  for  growth,  stability  and 
development, 2 March 2006, COM (2006) 86 final 

European  Commission  (2006b),  EU  relations  with  the  Pacific  islands  –  A  strategy  for  a 
strengthened partnership, 29 May 2006, COM (2006) 248 final 

European  Commission  (2006c),  Interconnecting  Africa:  the  EU-Africa  partnership  on 
infrastructure, 13 July 2007, COM (2006) 376 final 

European Commission (2007a), Advancing African Agriculture - Proposal for continental and 
regional level cooperation on agricultural development in Africa, 24 July 2007, COM (2007) 
440 final 

European  Commission  (2007b),  Strategy  for  the  Outermost  Regions:  Achievements  and 
Future Prospects, 12 September 2007, COM (2007) 507 final 

Ferroni,  Marco  (2001),  Regional  public  goods  in  official  development  assistance,  Inter-
American Development Bank, Occasional paper 11, November 2001 

Kanbur,  Ravi  (2001),  Cross-Border  Externalities,  International  Public  Goods  and  Their 
Implications  for  Aid  Agencies,  March  2001.  Revised  version  published  in  Lourdes  Beneria 
and  Savitri  Bisnath  (editors),  Global  Tensions:  Challenges  and  Opportunities  in  the  World 
Economy. Routledge, 2004. 

Oversees  Development  Institute  (2008),  Regional  Integration  in  ACP  –  A  Review  of 
Literature, 
http://ec.europa.eu/development/icenter/repository/Regional-Integration-Report-
18-09-2008_en.pdf  

PriceWaterhouseCoopers  (2007),  Sustainability  Impact  Assessment  of 
the  EU-ACP 
Economic Partnership Agreements - Summary of key findings, policy recommendations and 
lessons learned, www.sia-acp.org  

Venables,  Anthony  J.  (2000),  Winners  and  Losers  from  Regional  Integration  Agreements, 
CEPR.Discussion Paper N°2528, August 2000 

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